Will medical or chiropractor liens be deducted from my settlement funds?

Short answer: Possibly. In New York, medical providers, insurers (including no-fault, Medicare, and Medicaid), and other payers can claim reimbursement from a personal-injury settlement. The exact amount and whether the provider has a valid lien or right to be paid depends on the type of provider, how they were paid or assigned, and which laws or contracts apply. This article explains the common scenarios, the law you should know, and practical steps to protect settlement proceeds.

Detailed answer — how liens and reimbursements work under New York law

There are several different legal avenues by which medical bills can be taken from settlement funds. Which applies in your case depends on who treated you, who paid the bills, and what agreements or statutes apply.

1) Health insurers and subrogation (commercial plans)

If you have health insurance that paid for your care, the insurer often has a contract or subrogation right to be reimbursed from any recovery you obtain from a third party (the person who caused your injury). That reimbursement right usually comes from the insurance policy contract and state common-law principles. Your insurer may issue a demand for reimbursement or place a hold on settlement funds until it is satisfied. Commercial-plan subrogation is frequently negotiable — many plans will accept a reduced payment to release their lien.

2) No‑fault (automobile) PIP and provider claims

For auto accidents in New York, the motor vehicle Insurance Law governs Personal Injury Protection (PIP) benefits and provider billing. Providers who treated you after an auto accident often bill the no-fault carrier first. If you later recover from the at‑fault driver, providers or no‑fault carriers may try to recover amounts paid. See New York Insurance Law § 5102 for definitions and the framework for no‑fault benefits: https://www.nysenate.gov/legislation/laws/INS/5102.

3) Medicaid and Medicare

If Medicaid paid for any medical care, New York’s Medicaid recovery rules allow the state to seek reimbursement from third‑party recoveries. The state has a statutory right to recover payments from settlements. See New York Social Services Law § 369 (Medicaid recovery/assignment) for the state’s authority to pursue reimbursement: https://www.nysenate.gov/legislation/laws/SOS/369. Separately, Medicare has federal recovery/subrogation rules (42 U.S.C. § 1395y(b)) and may place a Medicare Conditional Payment claim against your settlement; Medicare typically requires repayment for conditional payments before a final release.

4) Hospital or treatment-provider liens and assignments

Some hospitals and providers may assert statutory or equitable liens or rely on an assignment of your tort claim. In New York, hospitals historically have certain lien rights and providers can sometimes claim an equitable lien (a court-ordered right to be paid from the proceeds of a settlement). Chiropractors generally do not have a special statutory hospital lien, but they can assert an assigned right to be paid if you signed an assignment of benefits or signed documents agreeing to let them pursue payment from your recovery. Whether such a claim succeeds depends on the paperwork and the facts.

5) Workers’ compensation lien

If your injury was work-related and workers’ compensation paid your medical bills or benefits, the workers’ compensation carrier can assert a lien against any third‑party recovery to be reimbursed. That is a separate process and often governed by Workers’ Compensation Law.

6) Practical impact on settlement proceeds

• Before money is distributed, your attorney (or the payer) will want lien statements, itemized bills, and payoff demands. That lets parties calculate what must be paid from the settlement.
• Some liens or demands might be invalid, excessive, or negotiable. Providers commonly agree to reduced lump‑sum payments to resolve their claims.
• If payers are not paid, they may sue you or your attorney, or threaten to put a hold on funds. That risk is why responsible counsel often obtains written payoff letters and lien releases before disbursing settlement proceeds.

What this means for chiropractic bills specifically

Chiropractors in New York often bill private health insurers, no‑fault insurers (after an auto accident), or receive direct payment. Whether a chiropractor can legally deduct from your settlement depends on:

• Whether you signed an assignment of your legal claim to the chiropractor or signed a document authorizing them to pursue payment from your settlement;
• Whether a no‑fault insurer or another insurer paid the chiropractor and now seeks reimbursement;
• Whether the chiropractor has an enforceable equitable lien or has filed a lawsuit to secure payment.

In many cases a chiropractor will be treated like any other medical provider: they can demand payment, and their claim can reduce your net settlement if not resolved before closing.

How these claims are usually handled in practice

Good personal‑injury practice before settlement includes:

• Requesting and getting written lien payoff letters from every medical provider, insurer, and government payer;
• Negotiating reductions — many providers accept less than billed charges; Medicare and Medicaid follow special rules for repayment;
• Escrowing or withholding disputed amounts until liens are resolved;
• Obtaining releases or lien waivers before disbursing funds so you do not remain personally exposed to later claims.

Helpful hypotheticals

Hypothetical A — Auto accident: You are injured in an auto accident in NYC, treated by a hospital and a chiropractor, and your health insurance paid part of the bills. The at‑fault driver’s insurer offers $20,000 to settle. Expect that the no‑fault insurer, your health insurer, and the chiropractor may all issue demands. Your attorney should demand payoff letters, negotiate reductions, and arrange payments so that you receive the fair portion of the settlement.

Hypothetical B — Medicaid recipient: Medicaid paid your post‑accident care. When you settle with the at‑fault driver, New York’s Medicaid recovery unit will assert a claim for repayment under Social Services Law § 369. That claim must be resolved before you can keep the full settlement amount.

Practical checklist: steps to take before you accept or cash a settlement

1. Ask your attorney to obtain written lien/payoff letters from every provider and insurer.
2. Confirm whether any treatment was paid by Medicaid or Medicare — those demands follow special laws and procedures.
3. Negotiate reductions where appropriate; many providers accept less to avoid litigation.
4. Require lien releases in writing before funds are distributed.
5. Consider escrow of disputed funds until claims are cleared.
6. Retain a lawyer experienced in New York personal injury who will handle subrogation, lien negotiation, and releases on your behalf.

Where to find the governing law

Relevant New York statutes and authorities include the Insurance Law (no‑fault rules), New York Social Services Law (Medicaid recovery), and case law on equitable liens and subrogation. See, for example:

• New York Insurance Law § 5102 (No‑fault definitions and framework): https://www.nysenate.gov/legislation/laws/INS/5102
• New York Social Services Law § 369 (Medicaid recovery/assignment authority): https://www.nysenate.gov/legislation/laws/SOS/369

Helpful Hints

• Do not sign away settlement funds without knowing who has a claim. Always get written payoff statements before you disburse proceeds.
• If a provider claims a lien, ask for a written explanation showing dates of service, amounts billed, amounts paid, and legal basis for the claim.
• Medicaid and Medicare claims are serious and often require formal repayment or a compromise before you can keep settlement money.
• Negotiation is common. Providers often accept a reduced lump‑sum payment rather than pursuing litigation.
• Keep all medical and billing records — they will support negotiations and dispute resolution.
• Resolve lien disputes before closing; if that is not possible, consider escrow or court intervention to protect your distribution.

Disclaimer: This article provides general information about New York law and common practices. It is not legal advice, does not create an attorney‑client relationship, and does not substitute for consulting a qualified New York attorney about the specific facts of your case.