The U.S. Supreme Court has decided not to hear an appeal by users of voluntary employee beneficiary association arrangements in a suit against VEBA providers.
The court's refusal to review the decision represents a victory for the VEBA providers including a variety of life insurers and financial consultants, against the VEBA users, who included doctors and doctors' professional corporations.
The case, Schneider et al. vs. Kirwan Financial et al., involved efforts by doctors to use life insurance policies held within VEBAs to lower their taxes.
The Internal Revenue Service announced in 1995 that it would disallow use of VEBAs to avoid taxes, and the Tax Court decided in 2000 that the VEBA plans owned by many doctors violated the Internal Revenue Code.
The doctors settled some claims against the VEBA providers, but the U.S. District Court in Newark, N.J., blocked other claims, and the 3rd Circuit Court of Appeals affirmed the district court's motions for summary judgment.
Representatives for the doctors and the providers were not immediately available for comment or declined to comment because they had just learned about the Supreme Court decision not to review the VEBA case.
The Supreme Court's decision not to hear Schneider makes the case a precedent in the 3rd Circuit, which includes Delaware, New Jersey and Pennsylvania, but does not affect VEBA cases in other circuits.
