Legal Definitions - fraudulent-concealment rule

The fraudulent-concealment rule is a legal principle that prevents a defendant from using the statute of limitations as a defense when they have actively hidden information or a cause of action from the plaintiff. In essence, if a wrongdoer fraudulently conceals their misconduct, the usual time limit for filing a lawsuit (the statute of limitations) is paused, or "tolled," until the plaintiff discovers, or reasonably should have discovered, the hidden facts that give rise to their claim. This rule ensures that individuals cannot benefit from their own deceptive actions by hiding wrongdoing until it's too late for the victim to seek justice.

• Example 1: Medical Malpractice

  A surgeon performs an operation and accidentally leaves a surgical instrument inside a patient. Realizing the mistake, the surgeon intentionally falsifies medical records and tells the patient that their persistent post-operative pain is normal and will eventually subside. Years later, the patient's pain becomes unbearable, and a new doctor discovers the forgotten instrument. The standard statute of limitations for medical malpractice might have expired by then. However, because the original surgeon fraudulently concealed their error and actively misled the patient, the fraudulent-concealment rule would likely pause the statute of limitations. This allows the patient to file a lawsuit even after the typical time limit, as they were prevented from discovering the malpractice due to the surgeon's deceit.

• Example 2: Financial Fraud

  A financial advisor convinces a client to invest a significant sum of money into a fraudulent scheme, promising high returns. The advisor then actively creates fake financial statements and sends misleading reports to the client for several years, showing fabricated profits and growth, while secretly siphoning off the client's funds. The client eventually becomes suspicious and hires an independent auditor, who uncovers the elaborate fraud. If the statute of limitations for fraud had already passed since the initial investment, the fraudulent-concealment rule would likely apply. The advisor's deliberate actions to hide the fraud and mislead the client would prevent them from using the expired statute of limitations as a defense, allowing the client to pursue legal action.

• Example 3: Construction Defects

  A contractor builds a new home and, to cut costs, uses substandard materials for the foundation, knowing it will lead to structural problems later. During construction, the contractor deliberately covers up the weak foundation with cosmetic finishes and assures the homeowner that everything is built to code. Five years after the home is completed, significant cracks appear in the walls and the foundation begins to visibly shift. The homeowner discovers that the foundation was never properly constructed. If the statute of limitations for construction defects had a shorter period, say three years, the fraudulent-concealment rule could extend it. The contractor's intentional act of hiding the defect and misleading the homeowner about the quality of the construction would prevent them from claiming the homeowner waited too long to sue.