Reported / Citable
Background
The United States sued Dr. Dongxin Ma and his practice, Ma Acupuncture Center, P.C., under the False Claims Act, alleging they submitted inflated bills for acupuncture services provided to veterans through the Department of Veterans Affairs. The government claimed the defendants received nearly $1.3 million to which they were not entitled and sought approximately $3.8 million in treble damages and nearly $20 million in civil penalties. The defendants denied liability, asserting they lacked the requisite scienter and had acted on a good-faith understanding of permitted billing procedures.
In September 2023, the parties attended court-ordered mediation before a former state district judge serving as a private mediator. At the conclusion of mediation, counsel reached agreement on five key terms: a $2.3 million total payment over 42 months with a $100,000 initial payment, government dismissal of the lawsuit and release of civil claims, Dr. Ma’s obligation to make reasonable efforts to sell property to fund the payment, and the government’s right to place liens on certain properties. The parties shook hands and the mediator filed an ADR summary stating the case had settled. The government subsequently sent a written agreement containing additional “standard” terms, which the defendants — now represented by new counsel — refused to sign, prompting the government to move to enforce the settlement.
The district court held an evidentiary hearing in January 2024. Testimony was disputed: Dr. Ma claimed he had never authorized his counsel to agree to more than $1 million and had privately expressed disagreement during mediation, while defense counsel and the government’s attorneys testified to a clear oral agreement on all material terms. The district court enforced the oral settlement as to its material terms, and later amended its judgment — on the government’s concession — to reflect only those terms reached at mediation, excluding the additional written provisions. The defendants appealed.
The Court’s Holding
The Fifth Circuit affirmed, finding no abuse of discretion in the district court’s conclusion that the parties formed a final and binding oral settlement at mediation. The court addressed four issues. First, the defendants forfeited their argument that defense counsel lacked authority to settle, having failed to raise it in their opening appellate brief. Second, the court held that the oral agreement covered all material terms — payment amount, schedule, initial payment, payment mechanism, enforcement mechanism, and release of civil claims — consistent with Fifth Circuit precedent that agreement on settlement amount and release of specific claims is generally sufficient.
Third, the court rejected the defendants’ argument that the agreement was not final until reduced to writing and signed. Under federal contract law, an oral settlement is enforceable even if the parties contemplate a later written release, unless they explicitly condition finality on execution of a formal agreement. The court found no such explicit condition here. Objective evidence — including the handshake conclusion of mediation, the mediator’s ADR summary, the government’s notice of settlement, and the defendants’ two-month silence without objection or response — supported the district court’s finding of mutual assent. Defense counsel’s private, undisclosed belief that the agreement was not yet final did not negate the objective manifestations of assent.
Fourth, the defendants forfeited their anticipatory repudiation argument by raising it for the first time in a post-judgment Rule 59(e) motion. The court reiterated that arguments not presented before judgment are generally forfeited on appeal, and the defendants identified no extraordinary circumstances to excuse the default. The additional written terms the government had included — such as reservations of criminal and tax claims, narrow defense waivers, and bankruptcy provisions — were found immaterial because they fell outside the essential agreed terms and were the sort of standard DOJ settlement provisions that defense counsel had acknowledged were customary.
Key Takeaways
- Under Fifth Circuit federal contract law, an oral agreement at mediation is binding once the parties have agreed on the monetary settlement amount and the scope of the release of claims, even without a signed written agreement, unless the parties explicitly conditioned finality on a formal writing.
- Post-mediation silence — failing to object to a filed notice of settlement, failing to respond to a pending summary judgment motion, and failing to raise concerns with opposing counsel — can constitute objective evidence of assent to a binding oral agreement.
- Defense counsel’s presumptive authority to settle binds a client; a client’s privately expressed disagreement during mediation, not communicated to opposing counsel or the court, does not rebut that authority where the argument is not properly preserved on appeal.
- Arguments raised for the first time in a Rule 59(e) motion to amend a judgment, including anticipatory repudiation, are forfeited on appeal absent extraordinary circumstances, which must be affirmatively demonstrated.
- Standard DOJ settlement terms not discussed at mediation — such as reservations of criminal claims, narrow defense waivers, and bankruptcy creditor provisions — are immaterial where the parties have already agreed on payment amount, schedule, and release of the subject civil claims.
Why It Matters
This decision reinforces that mediation agreements carry real legal weight in the Fifth Circuit even without a signed written document. Attorneys representing clients at mediation must ensure their clients understand that a handshake agreement on core terms — payment and release — may be immediately enforceable as a final contract. The opinion underscores that courts assess mutual assent objectively; a client’s private reservations or undisclosed disagreement during mediation will not unwind a settlement when counsel’s outward conduct signals agreement.
The case also serves as a procedural caution: failure to raise issues such as counsel’s settlement authority or anticipatory repudiation at the appropriate stage of district court proceedings risks forfeiture on appeal. For practitioners defending False Claims Act cases, the opinion highlights the importance of establishing explicit conditions on the finality of any mediation agreement before mediation concludes, and of promptly and formally objecting to any filed notice of settlement if the client disputes that a binding deal was reached.