VSP Vision Care (original) (raw)

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Insurance company

VSP Vision Care
Formerly CVS (California Vision Services)
Company type Private
Industry Vision insurance
Predecessors Alameda Contra Costa Optometric Society Joint Council on Vision Care
Founded September 1955; 69 years ago (1955-09) in Oakland, California
Founder Bernhardt N. Thal
Headquarters Rancho Cordova, California, US
Number of locations 34,000 (2016)
Areas served United States, Australia, Canada, Ireland, and the UK
Key people Michael Guyette (President and CEO of VSP Global)Michelle Skinner (Chief Provider & Industry Relations Officer)
Products Vision insurance, eyeglass frames and lenses
Production output 19 million frames (2017)
Brands Eye Designs, Eyeconic, Eyefinity, VSP Optics Group, Marchon Eyewear, Altair Eyewear, VisionWorks
Members 85 million (2017)
Subsidiaries Marchon Eyewear, Inc., Office Mate, Altair Eyewear, Visionworks
Website vspglobal.com

VSP Vision Care (VSP) is a vision care health insurance company operating in Australia, Canada, Ireland, the United States, and the United Kingdom. It is a doctor-governed company divided into five businesses: “eye care insurance, high-quality eyewear, lens and lens enhancements, ophthalmic technology, and connected experiences to strengthen the relationship between patients and their eye doctors.”[1] It has about 80 million members worldwide and is the largest vision insurance company in the United States.[2]

Formed in 1955 as a nonprofit organization by a group of optometrists in Oakland, California, it became a national provider, and expanded internationally by 2007. In 2003 the Internal Revenue Service revoked VSP's tax exempt status citing exclusionary, members-only practices, and high compensation to executives.[3]

International expansion

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In late 2007, VSP began to venture into Canada where it had served only Canadian-based employees of U.S. firms.[4] By 2012, VSP covered approximately 2,000 Canadians. In 2013, VSP Vision Care Canada entered into a partnership with FYidoctors, a private, optometry-owned eyecare provider with more than 400 optometrists at 212 locations throughout Canada. VSP would market, sell and administer its vision care insurance platform to employers across Canada.[5]

United Kingdom and Ireland

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In 2013, VSP expanded its eyecare offerings to the United Kingdom and Ireland, doing business as VSP Neighbourhood Eyecare, similar to the Australia and Canada ventures.[6] VSP partnered with the Association of Optometrists (AOP), National Eyecare Group (NEG); the U.K. branch of Italy's Assicurazioni General S.p.A. insurance provider, Generali U.K.; and Thomsons Online Benefits, which specializes in helping companies around the world run their employee benefits programs.[7][8]

In July 2008, VSP announced its acquisition of the Ft. Lauderdale, Fla.-based Ultra Lens lab and partnered with the optical lab Perfect Optics in California.[9]

In August 2008, VSP acquired the Melville, New York company Marchon Eyewear Inc. for $735 million with a combination of cash and debt after receiving regulatory approval from the California Department of Managed Care and the Connecticut Department of Insurance. The VSP-owned Altair Eyewear became a division of Marchon and remains in its Rancho Cordova headquarters. VSP also gained ownership of the frame company Allure Eyewear, as well as OfficeMate Software Solutions. Marchon manufactures and sells branded and proprietary eyewear and sunwear for such brands as Calvin Klein Collection, Calvin Klein platinum, Calvin Klein Jeans, Columbia Sportswear, Converse, Cutler and Gross, Donna Karan, Dragon, Flexon, Lacoste, Liu·Jo, Longchamp, Marchon NYC, Marni, MCM Worldwide, Nautica, Nike, Nine West, Salvatore Ferragamo, Sean John, Skaga, Victoria Beckham. Under the terms of the acquisition, Marchon became a wholly owned subsidiary. Marchon operates from its New York-based headquarters as an independent entity within the VSP organization.[10]

In 2019, VSP acquired Visionworks, an optical retailer in the U.S.[11]

Text of Vision Service Plan v. United States is available from: CaseText

As early as 1999, the IRS had started to look into VSP and its non-profit status.[3] It all came to a head when an article printed in Optometric Management revealed the financial information of VSP. The article claimed that VSP reported on its website that in 2002 revenues were $1.86 billion and that it provided eyecare coverage for one in eight persons living in the United States. VSP said that along with this growth, payments to doctors are increasing and systems are being implemented to raise O.D. margins. However, an increasing number of O.D.s claimed that margins were actually cut and administrative requirements made so burdensome that they have or were considering dropping VSP. They wonder why financial and operational decisions that affect optometrists across the country (for example, the WellVision Savings Statement) are made without their input.

In 2005, a federal district judge in Sacramento, California found that VSP failed to prove that it was not organized for profit nor for the promotion of the greater social welfare, as is required of a 501(c)(4). Instead, the district court found, VSP operates much like a for-profit (with, for example, its executives getting bonuses tied to net income) and primarily for the benefit of its own member/subscribers, not for some greater social good and, thereafter, concluded it was not entitled to tax-exempt status under 501(c)(4).[12]

In November 2005, the parties presented cases before a federal district judge. VSP asked to be confirmed as a social welfare organization under 26 U.S.C. §501(c)(4) and asked for return of the 2003 tax payments and an order that the United States issue it a private letter recognizing VSP's 501(c)(4) status. The government asked for summary judgment on the grounds that VSP did not qualify for tax exemption under 501(c)(4). Judge Lawrence Karlton ruled against VSP on December 12, 2005. VSP argued that it qualified for exemption under 501(c)(4) because its operations were primarily for the promotion of social welfare through direct (contracted) services to broad segments of the community as well as through charity work. While Judge Karlton described VSP's charitable work as admirable, he found that VSP failed to establish it operated primarily for the promotion of civic betterments and social improvements within the meaning of the tax regulations.

  1. ^ Mainwaring, Simon. "Purpose At Work: How VSP Global Drives Growth and Impact Through Purpose". Forbes. Retrieved 2020-07-06.
  2. ^ Strom, Stephanie (16 July 2008). "Vision Insurer to Ask Justices to Restore Its Tax Exemption". The New York Times. Retrieved 31 March 2016.
  3. ^ a b Weber, Gil (2008). "Op-Ed: Vision Service Plan vs. The United States of America". ODwire.org. Retrieved 31 March 2016.
  4. ^ Ciccolella, Cathy (21 July 2008). "VSP Ramps Up Growth With Acquisitions". Vision Monday. Jobson Medical Information LLC. Retrieved 1 April 2016.
  5. ^ Staff (20 December 2013). "FYidoctors and VSP Vision Care Canada Form Partnership". Vision Monday. Jobson Medical Information LLC. Retrieved 1 April 2016.
  6. ^ Press Release (12 March 2013). "VSP Offers Eyecare Benefits in the United Kingdom". m.newsroom.vspglobal.com. VSP Global. Retrieved 1 April 2016.
  7. ^ Staff (27 May 2013). "VSP Vision Care Expands Into the United Kingdom". Vision Monday. Jobson Medical Information LLC. Retrieved 1 April 2016.
  8. ^ Press Release (24 May 2013). "VSP Vision Care Offers Eyecare Benefit in the United Kingdom". VSP Newsroom. VSP Global. Retrieved 1 April 2016.
  9. ^ Ciccolella, Cathy (21 July 2008). "VSP Ramps Up Growth With Acquisitions". Vision Monday. Jobson Medical Information LLC. Retrieved 1 April 2016.
  10. ^ Staff (18 August 2008). "VSP buys Marchon Eyewear Inc. for $735M - Sacramento Business Journal". Sacramento Business Journal. Retrieved 1 April 2016.
  11. ^ "VSP Retail: Visionworks Acquisition is Complete but Not Our Investments in Private Practice". VSP Global. Retrieved 2021-02-14.
  12. ^ Weber, M.B.A., Gil; Smith, O.D., F. Mason (September 2003). "Point/Counterpoint - VSP Helps VSP; VSP is Good for Private Practice". Optometric Management. PentaVision. Retrieved 3 April 2016.