“Walking-Away” Can Cost You:
Fourth Circuit Clarifies Apparent-Authority Settlement Enforcement and the Impossibility of Voiding Accurate NPDB Reports

Introduction

Roland Chalifoux, Jr. v. Wetzel County Hospital, Inc. (4th Cir. July 8, 2025) concerns a physician’s attempt to renege on a $300,000 settlement reached after mediation in a dispute over revocation of his hospital privileges and an associated National Practitioner Data Bank (NPDB) report. The Court of Appeals affirmed the district court’s enforcement of the settlement, holding that:

• Attorney apparent authority can arise from a client’s conduct during negotiations and mediation—even if the client subsequently changes his mind;
• No plenary evidentiary hearing beyond a recorded, adversarial argument with documentary exhibits is required where the record suffices to resolve factual disputes;
• Accurate NPDB reports cannot be “voided” by private agreement unless the narrow regulatory grounds for voiding exist; and
• Premature public filing of settlement communications, even if contrary to mediation expectations, is not an automatic ground for nullifying an otherwise valid settlement.

The ruling refines earlier Fourth Circuit precedents (Hensley, Auvil, Moore, Smith-Phifer) on settlement enforcement and attorney authority. It also offers the first published (albeit the opinion itself is “unpublished”) circuit-level discussion directly linking NPDB voiding regulations to private settlement litigation.

Summary of the Judgment

• The district court granted Wetzel County Hospital’s motion to enforce the settlement reached when hospital counsel accepted the mid-point of a settlement “bracket” (USD 300,000) proposed by Dr. Chalifoux at mediation.
• The Fourth Circuit affirmed, finding no abuse of discretion in:
  • determining that a complete agreement existed,
  • finding attorney Kaminski had apparent authority to settle,
  • concluding that voiding the NPDB report was never a negotiated term, and
  • declining to sanction hospital counsel for filing mediation communications.
• The appellate court emphasized that once apparent authority is shown, the principal (client) is bound; reneging post-acceptance does not undo the deal.

Analysis

Precedents Cited and Their Influence

1. Hensley v. Alcon Laboratories, Inc., 277 F.3d 535 (4th Cir. 2002)
   – Established the two-step test: (1) complete agreement; (2) ascertainable terms. Chalifoux argued Hensley required a lengthier evidentiary hearing. The panel distinguished Hensley, noting that unlike the off-record conference there, the district court here held an on-the-record hearing, accepted evidence, and made findings.
2. Auvil v. Grafton Homes, Inc., 92 F.3d 226 (4th Cir. 1996)
   – Central authority on attorney apparent authority. In Auvil the attorney’s own representations were deemed insufficient. The present panel held that client conduct (participating in mediation, not revoking authority, and instructing counsel on numbers) supplied the missing link, thereby extending and clarifying Auvil.
3. Moore v. Beaufort County, 936 F.2d 159 (4th Cir. 1991) & Smith-Phifer v. City of Charlotte, 118 F.4th 598 (4th Cir. 2024)
   – Stress the need for factual clarity before enforcing settlements. The court found the record met those requirements.
4. West Virginia agency cases (General Electric Credit Corp. v. Fields, 133 S.E.2d 780 (W.Va. 1963); Sanson v. Brandywine Homes, 599 S.E.2d 730 (W.Va. 2004)) confirming presumptions of attorney authority when appearing in court.

Legal Reasoning

The court’s reasoning can be broken down into four inter-locking inquiries:

1. Was there a complete agreement?
   – Emails showed that all non-economic terms were agreed in August 2023.
   – The undisputed bracket offered by plaintiff at mediation had a mid-point; acceptance at that figure created mutual assent.
   – Silence on NPDB removal after March 2023 and during mediation indicated it was not a contemporaneous term.
2. Did counsel have authority?
   – Actual authority hotly disputed, but apparent authority found.
   – Client’s continued participation, failure to revoke, and instruction “I have authority to accept at 300k” created objective manifestation toward the hospital.
3. Sufficiency of the hearing.
   – On-record argument, cross-submissions, in-camera review of privileged emails were deemed adequate; hearsay objections waived.
4. NPDB Legal Framework.
   – 45 C.F.R. §60.6 allows voiding only for: (a) mistaken report; (b) non-reportable action; or (c) reversal on appeal.
   – None applied, hence court correctly labeled withdrawal “legally impossible,” bolstering finding that NPDB removal was not a condition precedent.

Impact of the Decision

• Settlement Enforcement: Strengthens defendants’ ability to enforce brackets and mid-point acceptances; parties must expressly withdraw offers or revoke mandate.
• Attorney-Client Relations: Puts practitioners and clients on notice that ambiguous communications and failure to document withdrawal of authority can be fatal.
• Mediation Confidentiality: Although the panel avoided sanctions, it signalled care is required when filing motion exhibits; but confidentiality breaches will rarely undo settlements absent prejudice.
• NPDB Litigation: First circuit-level statement explicitly tying NPDB void regulations to settlement disputes—expect hospitals to cite this case to resist contractual “pull-back” clauses.
• West Virginia & Fourth Circuit Precedent: Clarifies interaction between state presumptions of attorney authority and federal settlement enforcement standards.

Complex Concepts Simplified

• Apparent Authority: Even if you privately tell your lawyer “do not settle,” if you let the lawyer negotiate and the other side reasonably thinks the lawyer can bind you, you are bound.
• Bracketed Offer: A settlement technique where a plaintiff proposes a range (here, $200k–$400k) and implicitly commits to accept the midpoint if the defense agrees.
• National Practitioner Data Bank (NPDB): A federal database of adverse physician actions. Hospitals must report suspensions >30 days; removal requires showing a mistake or reversal—private deals cannot erase accurate entries.
• HCQIA Immunity: The Health Care Quality Improvement Act shields hospitals for peer-review actions and mandates certain NPDB reporting; it does not grant courts power to expunge correct reports.
• Plenary Evidentiary Hearing: A full-scale hearing with testimony. The Fourth Circuit clarifies that a recorded motion hearing with documentary evidence can satisfy this requirement when credibility issues are minimal.

Conclusion

Chalifoux is a cautionary tale for litigants who signal settlement authority and later attempt to retreat. The Fourth Circuit reinforced that:

1. Apparent authority hinges on the adversary’s reasonable belief—created by the principal’s own conduct—not on the principal’s later regrets;
2. Courts will enforce bracket-mid-point acceptances if negotiations and written exchanges show consensus on all material terms;
3. Regulatory schemes such as the NPDB cannot be overridden by private contract absent statutory grounds; and
4. While confidentiality in mediation is important, inadvertent exposure of settlement terms will not automatically rescind an otherwise valid agreement.

Practitioners should document the withdrawal of settlement authority in writing, expressly carve out unresolved terms such as NPDB treatment, and be mindful that court filings may become public records. Hospitals and other institutional defendants gain a useful precedent to counter last-minute plaintiff repudiations and to resist contractual commitments to alter mandated federal reports.