From MLB Trade Rumors:
According to MLB.com's Adam McCalvy and T.R. Sullivan, Ben Sheets has a torn flexor tendon in his elbow that might require surgery. There is some debate as to whether the Brewers would have to pay for the procedure. The Rangers and Sheets agreed to a two-year deal last week, but the physical threw a wrench into it. GM Jon Daniels says he's not optimistic at this point.
UPDATE According to Sheets's agent, the surgery is on.