(Bloomberg Business) -- Nearly a fifth of theNational Football League settlement approvedthis week compensating former players with head injuries could goto their health insurers instead.

As a result of federal laws and court rulings enabling insurersto recover costs of medical treatment for injuries, Medicare,Medicaid, and private insurers will be reimbursed before playersreceive any money. Their share will reduce the value of a dealalready criticized by some ex-players' lawyers asinadequate.

"It is an enormous problem," said George Washington Universitylaw professor Alan B. Morrison, who filed an amicus brief in thecase in federal district court in Philadelphia expressing concernabout the payments to health insurers. It could take a year orlonger to sort out how much is owed to which insurers, Morrisonsaid.

The settlement of the class action lawsuit alleging that the NFLfailed to properly investigate and respond to the risk ofconcussion-causing hits is expected to pay up to $1 billion to morethan 20,000 retired players.

The agreement allows for payments of up to $5 million to injuredplayers, or their surviving family members, depending on theseverity of the illness or injury. For instance, a player diagnosedwith amyotrophic lateral sclerosis, or Lou Gehrig's disease, could collect up to $5million, while someone with Parkinson's disease would be eligiblefor a maximum award of $3.5 million.

Most of those awards will be reduced by payments to healthinsurers, often referred to as medical liens.

Mark Wahlstrom, the president of a Phoenix company thathelps administer class action cases and reviewed medical billingsin the NFL case, said insurers could end up taking 15 to 18percent of the compensation set aside for the players. Among thebiggest beneficiaries will be Medicare, the government insuranceprogram for the elderly and disabled.

Over the past decade, federal laws have enhanced Medicare'sability to recover treatment costs by mandating that it be notifiedof any legal settlements paid to beneficiaries. Last year, Medicarenetted $2.5 billion from taking a cut of payments made to itsbeneficiaries by third parties.

In 2013, the U.S. Supreme Court ruled that some private insurersalso have the right to recover payments made to treat injuriescaused by a third party, a legal concept known as subrogation.Bloomberg News reported this month that an insurer is seeking torecoup $3.4 million from a San Francisco Giants fan who was left ina coma after being beaten by two Los Angeles Dodgersfans.

To help minimize the losses for ex-players, the federal court inthe NFL case appointed the Cincinnati-based Garretson ResolutionGroup Inc. to negotiate discounts of the health care liens.Garretson said in a court affidavit that it typically negotiates adiscount with Medicare and Medicaid on behalf of all the classmembers.

The judge in the case, Anita Brody, said in her ruling this weekthat paying insurers before the players was "reasonable" given thesignificant penalties for failing to do so. Hiring Garretson willhelp streamline the process and speed up payments to the players,she wrote in her ruling.

While he couldn't estimate the total payout to health insurers,Christopher Seeger, the lead counsel for the ex-players, said thediscounts will save money for victims.

"We are a few weeks away from finalizing discussions with thegovernment and we will get substantial discounts on liens,'' hesaid. ''This is going to be a huge success for players."

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