Detailed Answer

Whether medical or chiropractic bills are deducted from a personal injury settlement in Massachusetts depends on where the bills come from and whether a provider, insurer, or government payer has a legal or contractual claim to repayment.

Common categories of claims that can reduce your settlement:

• MassHealth (Medicaid) recovery: If MassHealth paid for your medical care related to the injury, it has a statutory right to be reimbursed from any third-party recovery. See Mass. Gen. Laws ch. 118E for MassHealth authority and recovery rules: M.G.L. c. 118E. You should expect MassHealth to assert a claim and seek repayment unless you resolve it before distribution.
• Medicare/Medicare conditional payments: Medicare may have paid for treatment and can seek repayment from your settlement. Federal Medicare Secondary Payer rules require resolving conditional payments and obtaining a final conditional payment amount from CMS before completion of settlement if Medicare paid for treatment. See CMS guidance on Medicare Secondary Payer: CMS — Medicare Secondary Payer.
• Private health insurer subrogation or reimbursement: Private insurers often have contractual subrogation rights (the right to be repaid from a settlement). The insurer or the provider (if the provider was assigned the debt) may demand reimbursement. The insurer’s contract with you and whether the plan is governed by ERISA (federal law) will affect how and how much they can recover.
• Workers’ compensation lien: If your injury was covered by workers’ compensation, the carrier can claim reimbursement from a third-party recovery. Massachusetts law addresses employer/carrier subrogation and reimbursement under the workers’ compensation statute: M.G.L. c. 152 § 15.
• Direct provider suits or judgment liens: In some cases, a medical provider (including a chiropractor) may obtain a judgment against you for unpaid bills or attempt to place a lien if state law permits such liens. Providers more commonly assert contractual rights or assign your debt to a collection agency than assert a statutory “medical lien.”

In short: medical and chiropractic bills often do reduce your settlement when a payer has a valid reimbursement, subrogation, statutory, or contractual claim. Which claims apply depends on who paid for the care (MassHealth, Medicare, private insurer, or you), whether the provider assigned its rights, and whether a statutory lien or workers’ comp subrogation applies.

How settlements are typically distributed

Typical order of distribution (subject to negotiation and court approval when required):

1. Attorney fees and litigation costs (if you agreed to a contingency fee).
2. Repayment of statutory or governmental liens (MassHealth, Medicare conditional payments).
3. Repayment of valid insurer subrogation and provider claims (after negotiation or court resolution).
4. Remaining net funds paid to you.

Because subrogation and lien claims can be large, the net you receive may be substantially less than the headline settlement amount.

Example (hypothetical)

Suppose a $100,000 settlement. Attorney fees (33%) = $33,000. Litigation costs = $2,000. MassHealth recovery = $10,000. Private insurer subrogation = $8,000. Net to you = $100,000 − $33,000 − $2,000 − $10,000 − $8,000 = $47,000. This example shows how multiple claims can reduce your recovery.

Helpful Hints

• Get full written lien/subrogation statements. Ask each medical provider, your attorney, and any insurer to produce a written itemized claim that shows the basis and amount of any lien or subrogation demand.
• Ask your attorney to resolve liens before final distribution. Your attorney should identify potential claimants (MassHealth, Medicare, private insurers, workers’ comp) and negotiate reductions or obtain releases.
• Notify MassHealth and Medicare early. Both agencies have procedures to identify third-party recoveries and to calculate repayment obligations. Resolving these claims before dispersal avoids later clawbacks or penalties.
• Negotiate reductions. Medical providers and insurers often will accept less than billed amounts to avoid litigation. Skilled negotiation can preserve more of your recovery.
• Consider holdback or escrow. If a lien claimant has not produced a demand or final figure, place funds in escrow or a client trust pending resolution to avoid personal liability for distributing funds prematurely.
• Review your insurance and provider contracts. ERISA plans and many insurer contracts contain strict subrogation rules. Understanding these rules helps prioritize claims.
• Get written releases. Do not rely on verbal assurances. Obtain written releases from lienholders before distributing settlement funds.
• Keep documentation of all medical bills and payments. Clear records make negotiation and verification of lien amounts easier.
• Talk to a Massachusetts personal injury attorney before signing settlement papers. An attorney experienced with subrogation and lien resolution in Massachusetts can protect your interests and explain statutory obligations like MassHealth and workers’ comp reimbursement.