Rancho Cordova-based Vision Service Plan has added Kenneth Starr, the former Whitewater investigator, to the legal team fighting to restore the mammoth eye care insurer's federal tax-exempt status.
The announcement adds a well-known litigator to VS.'s stable of attorneys who will ask the U.S. Supreme Court to decide whether the company is a "not-for-profit" business. The case could have far-reaching implications for similar organizations because it could reset the tax-exempt threshold for not-for-profit organizations.
VS., a $2.4 billion firm that provides eye-care insurance to one of every six Americans, lost the designation in 2003 after the IRS concluded it was not an organization "operated exclusively for the promotion of social welfare."
VS. disagreed, noting it had been tax exempt for 40 years and claimed it gives 85 percent of its money to optometrists with the balance going to charity and administration costs.
The company paid the tax bill and then lost a federal lawsuit in U.S. District Court in Sacramento for a refund and restoration of its exempt status.
It also lost on appeal to San Francisco's 9th Circuit Court. The company asked the court to reconsider the ruling, but it refused.
VS. has until Aug. 7 to file its petition with the Supreme Court. The court will reply by mid-October.
If the court agrees to hear the case, VS. and the government would probably make oral arguments in February or March.
Starr, the dean of Pepperdine University's law school and a litigator with Kirkland & Ellis LIP in Los Angeles, has argued 25 cases before the Supreme Court. He also was the independent counsel who investigated former President Clinton in the Whitewater matter.
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