Suspension of Standing Upon Bankruptcy Filing in Personal Injury Actions

Introduction

This commentary examines the Supreme Court of Virginia’s decision in Eye Consultants of Northern Virginia P.C. v. Shaw‐McDonald, 2025 Va. LEXIS ___, which establishes that a plaintiff’s voluntary Chapter 7 bankruptcy filing suspends—but does not permanently terminate—her standing to pursue a pending personal injury claim. We consider the parties, procedural history, and the precise issue decided by the Court.

Parties:

Plaintiff/Appellant: Fatima Shaw-McDonald, patient alleging malpractice in a cataract surgery.
Defendant/Appellee: Eye Consultants of Northern Virginia, P.C., the medical practice sued for negligence.

Background & Key Issue: Shaw-McDonald sustained vision loss after cataract surgery and timely filed a medical malpractice suit. Before trial, she filed for Chapter 7 bankruptcy without listing the malpractice claim in her schedules. Eye Consultants moved to dismiss for lack of standing, claiming Shaw-McDonald’s interest had transferred to the bankruptcy trustee. The circuit court granted dismissal, relying on Kocher v. Campbell, 282 Va. 113 (2011). The Court of Appeals reversed, and the Supreme Court of Virginia affirmed that dismissal was unwarranted.

Summary of the Judgment

The Supreme Court held, by a majority, that:

A plaintiff who timely files a personal injury action has standing at inception, and that standing is only suspended—rather than permanently terminated—by a subsequent Chapter 7 filing.
Bankruptcy law (11 U.S.C. § 541(a)(1)) creates an estate to which the malpractice claim initially transfers. The trustee may either pursue or abandon the claim. Exemption statutes (e.g., Va. Code § 34-28.1) allow certain personal injury causes to revert to the debtor upon abandonment or exemption.
Because Shaw-McDonald timely initiated her suit when she had standing, and because her interest re-vested when the trustee abandoned or exempted the claim, the circuit court erred in dismissing for lack of standing.
The case is remanded for trial; the decision of the Court of Appeals is affirmed.

Analysis

1. Precedents Cited

The Court discussed several key authorities:

Kocher v. Campbell, 282 Va. 113 (2011): Held that a plaintiff who files a malpractice claim after bankruptcy and fails to list it has no standing, because the claim remains in the estate and must be pursued by the trustee. The absence of standing at filing is a "legal nullity" and produces no tolling.
In re Dewsnup, 908 F.2d 588 (10th Cir. 1990), aff’d on other grounds, 502 U.S. 410 (1992): Explains that abandoned causes of action revert to the debtor “as if no bankruptcy petition was filed.”
Sessions v. Romadka, 145 U.S. 29 (1892): Longstanding principle that abandoned assets return automatically to the debtor.
Virginia Code § 34-28.1: State exemption statute for personal injury and wrongful death claims.

2. Legal Reasoning

The Court began by reaffirming that standing ensures the party asserting a claim has a concrete, pecuniary, and substantial interest at all stages (Cupp v. Board of Supervisors, 227 Va. 580 (1984); Clapper v. Amnesty Int’l, 568 U.S. 398 (2013)). While dismissal is required if standing is lacking at filing (Kocher), or if it is permanently lost (mootness), the Court held that a bankruptcy filing merely suspends standing in anticipation of trustee action.

Key points of the Court’s analysis:

Upon Chapter 7 filing, all legal interests—including pending malpractice claims—enter the bankruptcy estate by operation of 11 U.S.C. § 541(a)(1).
The trustee has two paths to resolve estate claims: (1) abandon under 11 U.S.C. § 554(c), or (2) allow debtors to exempt under 11 U.S.C. § 522 and state law (Va. Code § 34-28.1).
Once the trustee abandons or the asset is exempted, the cause of action reverts to the debtor “as if no bankruptcy petition was filed.”
Because Shaw-McDonald had timely filed her medical malpractice suit before the trustee’s abandonment and before the statute of limitations expired, her standing was only in abeyance, and her lawsuit remained valid.
Dismissal would be a “drastic remedy” in suspension scenarios; the proper procedure is to hold the case in abeyance until resolution in bankruptcy.

3. Impact on Future Cases and on Virginia Law

This decision clarifies Virginia standing doctrine in the intersection of state tort suits and federal bankruptcy:

Plaintiffs need not fear permanent loss of state-court claims by voluntary bankruptcy, provided they initially file timely and disclose claims to the trustee.
Defendants in malpractice and personal injury suits cannot obtain automatic dismissals upon a plaintiff’s bankruptcy; they may move for abeyance and substitution of the trustee if appropriate.
Encourages thorough disclosure of pending litigation in bankruptcy schedules to facilitate trustee decision-making and avoid confusion in parallel state proceedings.
Reaffirms Virginia’s policy to allow debtors to retain exempt personal injury claims (Va. Code § 34-28.1) and to preserve litigation rights where there is a concrete adversarial controversy.

Complex Concepts Simplified

Standing: The requirement that a plaintiff have a direct, personal stake in the outcome of a lawsuit at all stages.
Bankruptcy Estate: The pool of all legal and equitable interests of the debtor at filing, including pending lawsuits.
Abandonment (11 U.S.C. § 554(c)): When the trustee decides not to pursue certain assets, they automatically revert to the debtor on case closing.
Exemption (11 U.S.C. § 522 & Va. Code § 34-28.1): Statutory allowances that let debtors retain specified property—here, personal injury claims—even after bankruptcy.
Mootness vs. Suspension: A case becomes moot (and must be dismissed) if the plaintiff’s interest is permanently gone; suspension, by contrast, is a temporary pause until the bankruptcy process resolves the claim.

Conclusion

Eye Consultants of Northern Virginia P.C. v. Shaw-McDonald marks a significant refinement in Virginia standing jurisprudence. It holds that voluntary Chapter 7 filings suspend a plaintiff’s standing in pending personal injury actions rather than extinguishing it. By requiring disclosure and following trustee administration, the decision balances the interests of debtors, creditors, and defendants, ensuring that plaintiffs who timely initiate suits can resume them once their claims revert upon abandonment or exemption. This ruling provides clear guidance to practitioners handling overlapping bankruptcy and tort proceedings and protects the rights of injured plaintiffs against premature dismissal.