On Monday, the U.S. Supreme Court heard oral arguments for the case Mayo Foundation v. United States, 09-837. They are deciding whether residents should be considered students or employees. At issue is an 8th Circuit Court of Appeals decision upholding an IRS rule that deems resident physicians as ineligible for a "student exemption" to the Social Security and Medicare systems (FICA) tax because they work full-time.
Mayo Clinic officials want the court to overturn a federal appeals court ruling and restore the student exemption for medical residents. The Obama administration said that Social Security taxes for medical residents can be as much as $700 million a year.
Last month, AMSA and the Committee of Interns and Residents/SEIU Healthcare filed a friend of the court brief with the Supreme Court.
More than 100,000 resident physicians - doctors who have graduated medical school and received their M.D. or D.O. degree -- are working in teaching hospitals across the country as they acquire the on-the-job training required for certification in their medical specialty (for example, pediatrics or surgery). Resident physicians are known for their extremely long work hours, including 80 hour work weeks and on-call shifts of 24-30 consecutive hours, and for the round-the-clock services they provide to patients in more than 1,000 U.S. teaching hospitals.
The FICA student exemption has historically been granted to colleges and universities who employ undergraduates part-time to work in on-campus jobs -- for example, the university library or computer lab. In an attempt to improve their financial bottom line, some teaching hospitals have sought and won FICA tax refunds for themselves and also for resident physicians they employ because the wording of the rule was vague. In 2005, the IRS clarified its rule to explicitly exclude those working 40 hours or more a week.
In Mayo Foundation v United States of America, both the Mayo Foundation and the University of Minnesota dispute the IRS rule, claiming that all hospital employers and resident physicians should be exempt from paying into the Social Security and Medicare systems.
AMSA joined CIR in filing the amicus brief because "it is important to define the work of resident physicians," said Elizabeth Wiley, JD, MPH, AMSA Legislative Co-Director. "Residents are underpaid for all the hours they work and the often irreplaceable services they provide. To compare what we do as students to the work and responsibility of residents - well, it just defies truth and logic."