Detailed answer — what usually happens to settlement funds

When you settle a personal-injury claim in Michigan, settlement funds do not automatically go entirely to you. Many parties can assert legal or contractual rights to part of the recovery. Common claims that reduce the money you receive include:

• Medical-provider and chiropractor liens or claims: If a clinic, hospital, chiropractor, or other provider treated you for injuries caused by someone else, that provider may try to get paid from your settlement. The provider may assert a lien, a contractual assignment of your claim, or simply demand payment based on the services it provided.
• Health-insurer subrogation: Private health insurers who paid your medical bills can seek reimbursement from your settlement under subrogation or repayment provisions in your policy.
• Government payers (Medicare/Medicaid): If Medicare or Medicaid paid for treatment related to your injury, federal and state rules generally require repayment from any third-party recovery. Medicare in particular requires that conditional payments be identified and repaid.
• Attorney fees and case costs: Most contingency agreements let your lawyer take a percentage of the settlement (commonly around one-third, but terms vary). Fees and expenses are usually paid from the settlement proceeds.

Whether a medical or chiropractic lien is actually deducted depends on several facts:

• Does the provider have a valid written lien, contract, or assignment?
• Was the provider paid by another insurer (e.g., health insurance) and does that insurer have subrogation rights?
• Is Medicare or Michigan Medicaid involved and have they asserted a repayment demand?
• What does your contingency fee agreement say about paying liens, subrogation, and costs (some agreements require fees be calculated on the gross settlement; others on the net)?
• Have the provider and your attorney negotiated a reduced payoff or lien release?

In practice, many medical providers and chiropractors do get paid from the settlement — at least in part. However, providers often negotiate reductions rather than insisting on full billed amounts. Government payers (Medicare/Medicaid) and private insurers may have stronger, legally enforceable repayment rights than a private provider that never filed a formal lien.

How priority and distribution usually work

Distribution priorities can vary, but expect these practical steps at settlement:

1. Your lawyer gathers lien statements and payoff amounts from providers, insurers, and Medicare/Medicaid.
2. Lawyer or claims handler negotiates payoffs (providers commonly accept reduced amounts to avoid litigation and delay).
3. Attorney fees and case costs are calculated under your fee agreement (confirm whether fees apply to gross or net recovery).
4. Payoff amounts are paid out of settlement proceeds, and you receive the net balance.

Example (hypothetical): You settle for $50,000. Your contingency fee is 33% ($16,500). Case costs are $2,000. Medical bills and chiropractic liens total $15,000 but the providers agree to settle for $10,000. After attorney fees and costs you would receive approximately $21,500 ($50,000 – $16,500 – $2,000 – $10,000). Actual results depend on fee contract wording and final negotiated lien payoffs.

Medicare and Medicaid special rules

If Medicare or Michigan Medicaid paid for your treatment, they have strong statutory recovery rights and will typically demand repayment from any settlement that compensates you for medical expenses. For Medicare, your lawyer must identify any conditional payments and secure a final demand/conditional-payment resolution before distribution. Failing to resolve Medicare’s claim can lead to future demands and penalties.

For general Michigan Medicaid (MI Medicaid), providers may also pursue repayment; contact the Michigan Department of Health and Human Services for guidance: https://www.michigan.gov/mdhhs.

Chiropractors and other outpatient providers

Chiropractors often rely on an assignment or lien language in the paperwork you sign at the clinic or on a statutory lien if one applies. If they have a written assignment or recorded lien, they may have a stronger claim. However, small clinics commonly negotiate down rather than litigate. Always ask for a written payoff statement and a lien release before you finalize distribution.

Helpful hints — practical steps to protect your recovery

• Get all liens and payoff statements in writing. Request itemized bills and written lien payoff amounts from every provider who treated you.
• Tell your attorney about all insurers that paid your bills (private health insurance, Medicare, Medicaid). Your lawyer should check subrogation and government repayment obligations.
• Do not sign a settlement or accept funds until all liens and repayment demands are identified or until your lawyer secures written releases. If you accept money before clearing liens, you could remain personally liable.
• Ask your attorney to negotiate lien reductions. Many providers will accept a lower lump-sum payoff rather than incur litigation costs or delay.
• Confirm how attorney fees are calculated in your contingency agreement (on gross settlement vs. net after liens). This can materially change how much you receive.
• For Medicare beneficiaries, have your lawyer check conditional payments and obtain a final demand or confirmation of repayment amount from CMS before distributing funds. See Medicare information: https://www.cms.gov.
• Keep records of every payment and any lien release or satisfaction you receive. Get signed lien release documents from each provider you pay out of settlement.
• If a provider threatens to sue for payment, consult an attorney. Litigation over liens can often be avoided with negotiation or a court-approved distribution procedure.