How liens and subrogation claims affect settlement funds in Minnesota
Short answer: Medical bills, including those from hospitals, clinics, and sometimes chiropractors, can reduce the money you actually receive from a settlement. Whether and how much is deducted depends on the type of provider, whether a statutory lien or an assignment exists, insurer or government subrogation claims (for example, Medicaid or Medicare), and whether your attorney negotiates or offsets those claims before disbursement.
Disclaimer
This article explains general principles of Minnesota law for educational purposes only. It is not legal advice. For specific guidance on your situation, consult a licensed Minnesota attorney.
Detailed answer — how and why medical-related claims can reduce settlement funds
1. Types of claims that can attach to your settlement
- Statutory liens: Some providers (most notably hospitals) may have statutory lien rights against recoveries in personal injury cases. See Minnesota statutes on liens: https://www.revisor.mn.gov/statutes/cite/514
- Provider liens by contract or assignment: If you sign an assignment (for example, you tell a chiropractor to bill a settlement), the provider acquires a direct claim to part of the recovery.
- Insurer subrogation or reimbursement: Your health insurer or auto insurer may have a contractual right to be reimbursed from any third-party recovery (this is often called subrogation or reimbursement).
- Government recovery: Minnesota’s Medical Assistance (Medicaid) program and Medicare (federal) have strong rights to be repaid from settlements for medical services paid on your behalf. See Minnesota statutes on public assistance: https://www.revisor.mn.gov/statutes/cite/256 and federal Medicare recovery rules: https://www.govinfo.gov/link/uscode/42/1395y
2. Statutory and procedural sources
Minnesota has statutes governing hospital and related liens (see chapter 514) and separate statutory schemes for public benefits and workers’ compensation that give repayment or lien rights to state programs and insurers. You can review these chapters to learn the exact procedures and priorities: hospitals and liens — https://www.revisor.mn.gov/statutes/cite/514; auto insurance and no-fault rules — https://www.revisor.mn.gov/statutes/cite/65B; workers’ compensation — https://www.revisor.mn.gov/statutes/cite/176.
3. Chiropractors: typical situations in Minnesota
Chiropractors usually do not have a special statutory lien like a hospital might. Their ability to take funds from a settlement typically depends on one of these routes:
- You sign an assignment or a lien agreement with the chiropractor. That gives them a contractual right to be paid from any recovery you get.
- Your health insurer or auto insurer paid the chiropractor and seeks reimbursement (subrogation) from your recovery.
- The chiropractor sues you or your attorney for payment or files a common-law lien where permitted.
Because many chiropractors rely on assignment or health-insurer reimbursement, the precise impact on settlement funds depends on what paperwork you signed and how negotiations proceed.
4. Priority and negotiation
Priority (who gets paid first) varies. Government payors like Medicaid/Medical Assistance and Medicare have strong statutory or federal claims and commonly take priority for repayment. Hospitals with statutory liens can have priority under state lien statutes. Private providers and insurers often must negotiate or litigate their claims if you or your lawyer disputes the amount.
5. What usually happens at settlement
- Your attorney requests a payoff statement from each provider or insurer that claims a right to reimbursement.
- Payoff statements and liens are resolved by negotiation, offset, or by placing disputed funds in escrow until the matter is resolved.
- If a provider has a valid statutory lien or a clear assignment, the settlement fund holder (insurer or escrow agent) will often reduce the gross recovery by the lien amount before sending net proceeds to you and your attorney.
- In many cases, attorneys negotiate reductions to medical liens (providers accepting less than billed charges) because full billed amounts frequently exceed what is reasonable or customary.
6. Special issues — Medicare and Minnesota Medical Assistance
Medicare: If Medicare has paid for treatment related to your injury, it can require repayment of conditional payments from any settlement under federal law. See 42 U.S.C. § 1395y and related regulations: https://www.govinfo.gov/link/uscode/42/1395y. You (or your lawyer) must resolve Medicare’s conditional payment demand before you clear the settlement.
Minnesota Medical Assistance (Medicaid): Minnesota’s Medical Assistance program may have a statutory right to recover payments from third-party recoveries. That recovery can reduce the amount you receive. See Minnesota statutes on public assistance and the Department of Human Services recovery rules: https://www.revisor.mn.gov/statutes/cite/256.
7. Example hypotheticals
Hypothetical A: You settle a car-accident case for $50,000. A hospital has a statutory lien for $15,000, your chiropractor has an assignment claiming $3,000, and your health insurer demands $7,000 in reimbursement. After negotiating the chiropractor down to $1,500 and the insurer to $5,000, and after satisfying the hospital lien, your attorney subtracts these amounts (plus attorney fees and costs) before disbursing the remainder to you.
Hypothetical B: Medicare paid $8,000 for your emergency care. You settle for $20,000. Before you get any of that money, you must resolve Medicare’s conditional payment demand; Medicare’s final recovery amount could significantly lower your net proceeds.
8. What you should do before signing any settlement
- Ask your attorney to obtain payoff statements and itemized bills from all medical providers and insurers.
- Confirm whether you signed any assignments or lien agreements with providers (many providers require these forms when treating on a promise-to-pay basis).
- Check whether Medicare or Minnesota Medical Assistance paid for treatment and request conditional payment or reimbursement amounts early.
- Do not accept or sign a global release until lien and subrogation issues are clear or funds are placed in escrow to address disputes.
- Consider holding disputed funds in an attorney trust account or escrow until claims resolve.
Helpful Hints
- Get written payoff figures: Ask each provider and insurer for a written, itemized payoff or demand before settling.
- Negotiate aggressively: Providers and insurers often accept less than full billed charges, especially when the treating provider knows you only recover from a third party.
- Protect funds for minors or incapacitated clients: Court approval may be required before settlement funds are distributed — that process also resolves liens and set-asides.
- Address Medicare early: Medicare’s conditional payment process takes time. Handle it before settlement to avoid delays or unexpected reductions.
- Ask about lien waivers: Some providers will sign a lien waiver in exchange for immediate, partial payment.
- Use an attorney experienced with subrogation: Attorneys familiar with Minnesota lien and subrogation law can often reduce amounts and speed resolution.
- Keep documentation: Preserve all treatment records, assignment forms, correspondence, and payoff letters in case a provider later asserts a claim.
Where to read the law
State statutes and chapters that commonly relate to these issues in Minnesota:
- Liens (including hospital liens): https://www.revisor.mn.gov/statutes/cite/514
- Auto insurance (no-fault and related provisions): https://www.revisor.mn.gov/statutes/cite/65B
- Medical Assistance and public assistance statutes: https://www.revisor.mn.gov/statutes/cite/256
- Workers’ compensation: https://www.revisor.mn.gov/statutes/cite/176
- Federal Medicare repayment and conditional payment rules: https://www.govinfo.gov/link/uscode/42/1395y
Final takeaway
Yes — medical bills, insurer reimbursements, and government program claims (including potential chiropractor claims via assignment) can all reduce what you actually receive from a settlement in Minnesota. The exact outcome depends on statutory liens, signed assignments, insurer subrogation, and negotiation. To protect your recovery, get written payoff figures, resolve Medicare/Medical Assistance demands early, and work with an attorney who will identify and resolve liens before distribution.