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Case Summary: Borderlon v. Peck, No. C-1864 (Supreme Court of Texas, July 6, 1983)

Factual and Procedural Background

On January 17, 1979 Dr. Reigh Peck performed surgery on Catherine Borderlon to remove intestinal obstructions. During that operation a suture needle broke and, according to the record, a portion of the needle was left in Borderlon's abdominal region. The record contains conflicting deposition testimony: Borderlon testified Dr. Peck did not inform her that a portion of the needle had been left in her abdomen; Dr. Peck testified that he did inform her. Dr. Peck last treated Borderlon on February 21, 1979. On February 25, 1979 Borderlon underwent x-rays and was informed a small foreign linear object was present in her abdomen. On March 2, 1979 a subsequent operation removed the needle.

Borderlon filed a medical-malpractice action on February 27, 1981 — six days after the two-year limitations period in article 4590i, section 10.01 had run (as applied by the trial court and court of appeals). Dr. Peck moved for summary judgment based on limitations. Borderlon responded, alleging that Dr. Peck fraudulently concealed the fact that the needle was left inside her. The trial court granted summary judgment for Dr. Peck. The court of appeals affirmed, holding that section 10.01 establishes an absolute statute of limitations for medical-malpractice claims and abolishes fraudulent concealment as an exception. The Supreme Court of Texas reversed the judgments below and remanded the cause for trial.

Legal Issues Presented

  1. Whether article 4590i, section 10.01 abolishes fraudulent concealment as a basis for extending the statute of limitations in health care liability (medical-malpractice) actions.

Arguments of the Parties

Petitioner (Catherine Borderlon)

  • Alleged Dr. Peck fraudulently concealed from her the fact that a portion of a suture needle was left in her abdomen.
  • Asserted that fraudulent concealment, grounded in equitable estoppel, prevents a defendant from relying on the statute of limitations until the plaintiff discovers or reasonably should have discovered the cause of action.
  • Contended that she filed suit within a period allowed when fraudulent concealment is properly established as an equitable estoppel to limitations.

Respondent (Dr. Reigh Peck)

  • Moved for summary judgment on the ground that the action was barred by the two-year limitations period in article 4590i, section 10.01.
  • Deposition testimony from Dr. Peck asserted he informed Borderlon that part of the needle had been left in her abdomen (fact dispute).
  • At the court of appeals level (and as reflected in the dissenting opinion), the position was that section 10.01 imposes an absolute two-year statute of limitations that eliminates court-made exceptions such as fraudulent concealment.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Estate of Stonecipher v. Estate of Butts, 591 S.W.2d 806 (Tex. 1979) Authority that fraudulent concealment (equitable estoppel) prevents a defendant from relying on statute of limitations until plaintiff learns or should have learned of claim. Cited by the majority as supporting the proposition that fraudulent concealment estops a defendant from pleading limitations.
Nichols v. Smith, 507 S.W.2d 518 (Tex. 1974) Recognition of a physician's duty to disclose negligent acts or facts that an injury has occurred; failure to disclose can constitute fraudulent concealment. Used by the majority to show physicians have a duty of disclosure that can give rise to fraudulent concealment.
Thompson v. Barnard, 142 S.W.2d 238 (Tex.Civ.App. — Waco 1940); aff'd 158 S.W.2d 486 (Tex. 1942) Support for the duty to disclose and the application of fraudulent concealment principles. Cited by the majority among authorities recognizing disclosure duties and fraudulent concealment tolling limitations.
Sherman v. Sipper, 152 S.W.2d 319 (Tex. 1941) Authority cited in the line of cases holding fraud vitiates whatever it touches; supports equitable estoppel for fraudulent concealment. Included by the majority as part of the historical body of authority preventing wrongdoers from using limitations as a shield.
Fitzpatrick v. Marlowe, 553 S.W.2d 190 (Tex.Civ.App. — Tyler 1977, writ ref'd n.r.e.) Holds failure to disclose in physician-patient context can constitute fraudulent concealment. Cited by the majority to support the physician's disclosure duty and fraudulent concealment doctrine.
Elsesser v. Cotham, 250 S.W.2d 591 (Tex.Civ.App. — San Antonio 1952, no writ) Authority on fraudulent concealment tolling statutes of limitation. Referred to by the majority as part of established Texas authority on equitable estoppel for fraudulent concealment.
Ruebeck v. Hunt (Reubeck v. Hunt), 176 S.W.2d 738 (Tex. 1943) Describes that when fraudulent concealment prevents discovery, estoppel prevents reliance on limitations until discovery or inquiry. Used by the majority to explain when the estoppel effect of fraudulent concealment ends (upon knowledge or facts prompting inquiry).
Glenn v. Steele, 61 S.W.2d 810 (Tex. 1933) Part of the authorities affirming that fraud vitiates whatever it touches and that discovery-equivalent knowledge ends estoppel. Cited by the majority to support the equality of inquiry-notice and actual knowledge in ending estoppel.
Port Arthur Rice Milling Co. v. Beaumont Rice Mills, 143 S.W. 926 (Tex. 1912) Early authority for the principle that fraud prevents a party from using limitations when fraud has prevented the other party from bringing suit. Included by the majority to illustrate the long-standing maxim that fraud vitiates whatever it touches.
Heirs of Brown v. Brown, 61 Tex. 45 (1884) Historical authority cited for the general precept that fraud vitiates whatever it touches. Referenced by the majority as part of the longstanding Texas rule disallowing limitations as a reward for fraud.
Munson v. Hallowell, 26 Tex. 475 (1863) Another historical precedent for the proposition that fraud defeats the protection of a statute of limitations. Included by the majority among foundational cases supporting the fraud-does-not-allow-limiter rule.
McClung v. Johnson, 620 S.W.2d 644 (Tex.Civ.App. — Dallas 1981, writ ref'd n.r.e.) Holds that once the confidential physician-patient relationship terminates, the duty to disclose (and corresponding fraudulent concealment) ceases. Cited in the dissent to argue that any duty to disclose ended when treatment was completed and thus limitations should have begun to run then.
Railroad Commission of Texas v. Miller, 434 S.W.2d 670 (Tex. 1968) Principle of statutory interpretation: where statutory language is unambiguous, courts must apply the plain meaning to ascertain legislative intent. Cited in the dissent as the supporting rule for applying the plain language of section 10.01 to abolish court-made exceptions.
Hunter v. Fort Worth Capital Corp., 620 S.W.2d 547 (Tex. 1981) Statutory construction principle that courts should avoid interpretations that render legislative action meaningless. Cited in the dissent to argue the majority's construction would make the statute's limitations meaningless.
Bomar v. Trinity Nat'l Life & Accident Ins. Co., 579 S.W.2d 464 (Tex. 1979) Statutory-construction principle cited alongside Hunter regarding presumptions about legislative purpose. Used in the dissent to reinforce the point that the legislature is not presumed to do a useless act.

Court's Reasoning and Analysis

The Court began by identifying fraudulent concealment as an equitable-estoppel doctrine: where a defendant is under a duty to disclose but fraudulently conceals a cause of action from the plaintiff, the defendant is estopped from relying on the statute of limitations until the plaintiff learns or should have learned of the cause of action through reasonable diligence. The Court described the physician-patient relationship as one of trust and confidence that imposes a duty on the physician to disclose negligent acts or facts that an injury has occurred; failure to disclose in that context can constitute fraudulent concealment and thus prevent a wrongdoer from using limitations as a shield.

The Court rejected the proposition that article 4590i, section 10.01, abolished fraudulent concealment as an equitable estoppel to the limitations defense. The majority grounded this conclusion in the longstanding Texas doctrine that "fraud vitiates whatever it touches," and in numerous precedent holding that a party will not be allowed to take advantage of the protection of a limitations statute where, by his own fraud, he has prevented another from seeking redress within the limitations period.

Applying these principles to the record, the Court held that Borderlon should be permitted to present evidence that, if believed, would estop Dr. Peck from pleading limitations. The Court stressed that this holding does not guarantee recovery; it only allows Borderlon to submit evidence on fraudulent concealment. The majority further explained when the estoppel effect ends: it ceases when a party learns of facts, conditions, or circumstances that would cause a reasonably prudent person to make inquiry which, if pursued, would lead to discovery of the concealed cause of action. The Court recognized a factual dispute — specifically, whether, exercising reasonable diligence, Borderlon knew or should have known on February 25, 1979 (when x-rays revealed a foreign object) that the object gave rise to a cause of action against Dr. Peck — and concluded that a fact issue remained to be tried.

The dissenting opinion argued that the plain language of section 10.01 and legislative history demonstrated the legislature's intent to impose an absolute two-year statute and to abolish court-made exceptions. The dissent also argued that the physician-patient relationship (and any disclosure duty) ended when treatment ended on February 21, 1979, and that Borderlon's knowledge on February 25, 1979 triggered the running of the limitations period as a matter of law. Those views were expressly rejected by the majority.

Holding and Implications

Core Holding: The Supreme Court of Texas held that article 4590i, section 10.01 does not abolish fraudulent concealment as an equitable estoppel to the affirmative defense of limitations under that statute.

Direct implications:

  • The judgments of the trial court and court of appeals (granting summary judgment for Dr. Peck on limitations grounds) were reversed, and the cause was remanded for trial.
  • Borderlon is not granted a decree of recovery by this ruling; rather, she is permitted to present evidence at trial which, if believed, could estop Dr. Peck from invoking the statute of limitations.
  • The Court clarified that the estoppel effect of fraudulent concealment ends when the plaintiff learns of facts that would put a reasonably prudent person on inquiry leading to discovery of the cause of action (knowledge equivalent to discovery).

Broader implications: The opinion preserves the court-made doctrine that fraudulent concealment can toll or equitably estop the limitations defense in health-care liability cases despite the enactment of section 10.01. The Court applied longstanding equitable principles and precedent to interpret the statute in a manner that does not abolish fraudulent-concealment estoppel.


Disposition note: The Supreme Court reversed the lower courts' judgments and remanded the matter for trial. A dissent was filed by Justice Barrow, joined by Chief Justice Pope and Justices Campbell and Wallace, expressing the view that section 10.01 created an absolute two-year statute of limitations that abolished fraudulent concealment as an exception.

Catherine BORDERLON, Petitioner, v. Dr. Reigh PECK, Respondent.

McGEE, Justice.

The sole issue in this medical malpractice case is whether article 4590i, section 10.01, abolishes fraudulent concealment as a basis for extending limitations in health care liability actions. The court of appeals held section 10.01 establishes an absolute statute of limitations for all forms of medical malpractice, regardless of fraudulent concealment, and affirmed summary judgment in favor of the doctor. 643 S.W.2d 233. We reverse the judgments of the lower courts and remand the cause for trial.

All statutory references are to Texas Revised Civil Statutes Annotated.

On January 17, 1979, Dr. Reigh Peck performed surgery on Catherine Borderlon to remove obstructions from her intestines. During the operation, a suture needle broke and Dr. Peck purposely left a portion of the needle in Borderlon's abdominal region. Borderlon testified in deposition that Dr. Peck did not inform her of his decision to leave the needle in her abdomen. Dr. Peck testified in deposition that he did inform Borderlon of this fact. Dr. Peck last treated Borderlon on February 21, 1979. On February 25, 1979, Borderlon underwent x-rays, and was informed there was a small foreign linear object in her abdomen. On March 2, 1979, Borderlon had another operation during which the needle was discovered and removed.

Borderlon filed this medical malpractice action on February 27, 1981, six days after the two-year limitations period in section 10.01 had run. Dr. Peck moved for summary judgment based on limitations. Borderlon subsequently filed a response in which she alleged Dr. Peck fraudulently concealed from her the fact he left the needle inside her. The trial court granted summary judgment for Dr. Peck, and the court of appeals affirmed. The court of appeals held the legislature intended to establish an absolute time limit in which suits must be filed, thereby abolishing fraudulent concealment as an exception to the defense of limitations.

Article 4590i, section 10.01 provides in pertinent part:

Notwithstanding any other law, no health care liability claim may be commenced unless the action is filed within two years from the occurrence of breach or tort or from the date the medical or health care treatment that is the subject of the claim or the hospitalization for which the claim is made is completed; . . .

Fraudulent concealment is based upon the doctrine of equitable estoppel. In the proper case, invocation of fraudulent concealment estops a defendant from relying on the statute of limitations as an affirmative defense to plaintiff's claim. Where a defendant is under a duty to make disclosure but fraudulently conceals the existence of a cause of action from the party to whom it belongs, the defendant is estopped from relying on the defense of limitations until the party learns of the right of action or should have learned thereof through the exercise of reasonable diligence. Estate of Stonecipher v. Estate of Butts, 591 S.W.2d 806, 809 (Tex. 1979); Nichols v. Smith, 507 S.W.2d 518, 519 (Tex. 1974); Thompson v. Barnard, 142 S.W.2d 238, 241 (Tex.Civ.App. — Waco 1940) aff'd, 138 Tex. 277, 158 S.W.2d 486 (1942); Sherman v. Sipper, 137 Tex. 85, 152 S.W.2d 319, 321 (1941); Fitzpatrick v. Marlowe, 553 S.W.2d 190, 194 (Tex.Civ.App. — Tyler 1977, writ ref'd n.r.e.); Elsesser v. Cotham, 250 S.W.2d 591, 592 (Tex.Civ.App. — San Antonio 1952, no writ).

Because the physician-patient relationship is one of trust and confidence, Texas recognizes a duty on the part of the physician to disclose a negligent act or fact that an injury has occurred. Nichols v. Smith, 507 S.W.2d at 519; Fitzpatrick v. Marlowe, 553 S.W.2d at 194; Thompson v. Barnard, 142 S.W.2d at 241. Failure to disclose in such situations constitutes fraudulent concealment which will prevent the wrongdoer from perpetrating further fraud by using limitations as a shield.

We do not agree that section 10.01 abolishes fraudulent concealment as an equitable estoppel to the defense of limitations. Texas courts have long adhered to the view that fraud vitiates whatever it touches, and have consistently held that a party will not be permitted to avail himself of the protection of a limitations statute when by his own fraud he has prevented the other party from seeking redress within the period of limitations. To reward a wrongdoer for his own fraudulent contrivance would make the statute a means of encouraging rather than preventing fraud. Estate of Stonecipher v. Estate of Butts, 591 S.W.2d at 809; Ruebeck v. Hunt, 142 Tex. 167, 176 S.W.2d 738, 739 (1943); Glenn v. Steele, 141 Tex. 565, 61 S.W.2d 810, 810 (1933); Port Arthur Rice Milling Co. v. Beaumont Rice Mills, 105 Tex. 514, 522, 143 S.W. 926, 929 (1912); Heirs of Brown v. Brown, 61 Tex. 45, 59 (1884); Munson v. Hallowell, 26 Tex. 475, 484 (1863).

We hold, therefore, that article 4590i, section 10.01 does not abolish fraudulent concealment as an equitable estoppel to the affirmative defense of limitations under that statute.

Our holding does not imply a right of recovery by Borderlon. It merely permits her to present evidence, which, if believed, would estop Dr. Peck from pleading limitations as a bar to her claim for relief. The estoppel effect of fraudulent concealment ends when a party learns of facts, conditions, or circumstances which would cause a reasonably prudent person to make inquiry, which, if pursued, would lead to discovery of the concealed cause of action. Knowledge of such facts is in law equivalent to knowledge of the cause of action. Reubeck v. Hunt, 176 S.W.2d at 739; Glenn v. Steele, 61 S.W.2d at 810. A fact issue exists whether, in the exercise of reasonable diligence, Borderlon knew, or should have known on February 25, that the presence of the foreign object in her abdomen gave rise to a cause of action against Dr. Peck.

The judgments of the lower courts are reversed and the cause is remanded.

Dissenting opinion by BARROW, J., in which POPE, C.J., and CAMPBELL and WALLACE, JJ., join.

BARROW, Justice, dissenting.

I respectfully dissent. I would hold that section 10.01 of article 4590i abolishes fraudulent concealment as an exception to the statute of limitations defense. This holding is compelled by the clear and express language of section 10.01. This section states in part that:

All statutory references are to Texas Revised Civil Statutes Annotated.

Notwithstanding any other law, no health care liability claim may be commenced unless the action is filed within two years from the occurrence of the breach or tort or from the date the medical or health care treatment that is the subject of the claim or the hospitalization for which the claim is made is completed . . . . (emphasis added.)

The legislature left no room for question when it selected this language to abolish all court-made exceptions to limitations and impose an absolute two-year statute. Where language in a statute is unambiguous, courts must apply the intent of the legislature as found in the plain and common meaning of the words and terms used. Railroad Commission of Texas v. Miller, 434 S.W.2d 670, 672 (Tex. 1968). Because courts are not "law-making" bodies, they must take statutes as they find them. Id. at 672.

The legislative history also documents the intent of the legislature to impose an absolute two-year statute of limitations. The Texas Medical Professional Liability Study Commission was formed by an act of the legislature to make specific recommendations concerning the medical malpractice crisis. The proposal sent to the legislature by the Study Commission made the following recommendation:

[T]he statute of limitations be altered so that a claimant must bring a suit within one year from the date the claimant discovered or should have discovered the injury but in no event can the suit be brought more than three years after the injury occurred.

Medical Liability Ins. Underwriting Ass'n Act, ch. 331, § 2, 1975 Tex.Gen Laws 867, 872-73 (expired 1977).

The legislature, however, rejected this recommendation and substituted a compromise provision. The limitations statute passed by the legislature adopted an absolute two year period which begins to run when the treatment upon which the claim is based is completed. This provision delays the start of the limitations period from the date of the injury to the date treatment is completed and the patient is no longer relying on the health care provider. This indicates that the clear intent of the legislature in enacting section 10.01 was to eliminate all prior court developed exceptions to limitations in all medical malpractice cases including the fraudulent concealment of the malpractice. See Witherspoon, Constitutionality of the Texas Statute Limiting Liability for Medical Malpractice, 10 Tex.Tech L.Rev. 419, 425 (1979).

The majority circumvents the legislature's intent by holding that fraudulent concealment is an exception to the statute of limitations. The fraud asserted here is based solely on the physician-patient relationship. According to the majority, the existence of the physician-patient relationship creates a duty to disclose the negligent act or injury. The failure to disclose such information constitutes fraudulent concealment which estops the physician from raising limitations as a defense. The majority's reasoning implicitly recognizes the legislature's intent to abolish all the court-made exceptions to the defense of limitations in medical malpractice actions by arbitrarily carving a new category for fraudulent concealment. This reasoning, however, would make the limitations period meaningless since every claim against the physician or health care provider involves a physician-patient relationship. The majority's interpretation ignores the rule of statutory construction that the legislature is never presumed to do a useless or meaningless act. Hunter v. Fort Worth Capital Corp., 620 S.W.2d 547, 551 (Tex. 1981); see Bomar v. Trinity National Life and Accident Insurance Co., 579 S.W.2d 464, 465 (Tex. 1979).

In any event, the fraudulent concealment exception would not warrant the reversal of the judgments of the courts below under the facts in this case. The basis for the majority's application of fraudulent concealment rests on the confidential physician-patient relationship. Once this confidential relationship terminated, the duty to disclose and the fraudulent concealment also ceased to exist. McClung v. Johnson, 620 S.W.2d 644, 647 (Tex.Civ.App. — Dallas 1981, writ ref'd n.r.e.).

Dr. Peck's treatment of Borderlon was completed on February 21, 1979; therefore, the confidential relationship relied upon by the majority ended at that time. Dr. Peck's "fraudulent concealment" of the cause of action also ended and the two-year limitation began to run. Since Borderlon did not file her action until February 27, 1981, her action was barred even if fraudulent concealment was not abolished by section 10.01.

Furthermore, the record establishes that Borderlon was informed of the facts underlying this action on February 25, 1979 when an x-ray revealed that a small, foreign, linear object remained in her abdomen after the surgery. The estoppel effect of fraudulent concealment ends when a party learns of facts, conditions, or circumstances which would cause a reasonably prudent person to make inquiry which, if pursued, would lead to discovery of the concealed cause of action. Knowledge of such facts is equivalent to knowledge of the cause of action. See Nichols v. Smith, 507 S.W.2d 518, 519 (Tex. 1974); Ruebeck v. Hunt, 142 Tex. 167, 176 S.W.2d 738, 739 (1943); Glenn v. Steele, 141 Tex. 565, 61 S.W.2d 810 (1933).

It is undisputed that on February 25, 1979 Borderlon was informed of the presence of the foreign object in her abdominal region, the same area Dr. Peck had operated on just eight days earlier. This knowledge alone would, as a matter of law, put Borderlon on inquiry and ended any alleged fraudulent concealment. Her knowledge would have triggered the running of the statute, and the filing of suit on February 27, 1981 would still be outside the two year limitations period.

For all of the foregoing reasons, I would apply section 10.01 as the legislators clearly intended and affirm the judgments of the courts below.

POPE, C.J., and CAMPBELL and WALLACE, JJ., join in this dissenting opinion.

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BORDERLON v. PECK
(Nov 23, 1983)