Ken Starr to Appeal Tax-Exempt Case to Supreme Court

VSP Vision Care has hired former U.S. Solicitor General Ken Starr to represent the eye care insurance provider in an appeal to the U.S. Supreme Court on its tax-exempt status.

Starr (pictured) became famous as an independent counsel investigating Whitewater and other scandals during the Clinton administration and the author of the Starr Report detailing Monica Lewinski's involvement with President Clinton. VSP has added him to its legal team as it files a writ of certiorari to the Supreme Court for a final hearing on its tax-exempt status.

"They take a small number of cases, but we think it's an important case," said spokesman Pat McNeil. "We feel that having a not-for-profit model for health care, along with a for-profit model, is important."

VSP plans to file with the Supreme Court by August 7 and expects to hear in the fall on whether the high court will take the case. McNeil believes the case could set a precedent.

Starr joins an appellate legal team that already includes senior litigation partner Douglas C. Ross of Davis Wright Tremaine LLP, who has represented VSP in the tax matter since 2003, and Thomas A. Fessler, VSP's vice president and general counsel.

"This case is really about determining what guidelines the IRS uses to define what constitutes a tax-exempt not-for-profit organization," said Starr in a statement. "VSP had a tax-exemption for more than 40 years, has not changed their business philosophy or focus on the community, and yet lost their tax-exempt status. In the end, we are simply asking the Supreme Court to recognize the significant community benefit VSP offers to more than 55 million Americans."

In 1960, VSP was granted an exemption from its obligation to pay federal income taxes. In 2003, based on an examination conducted in 1999, the IRS issued a final adverse determination letter, revoking tax-exempt status for VSP's California corporation effective Jan. 1, 2003. VSP has been paying taxes since then while pursuing its so-far unsuccessful appeals.

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