In November, I wrote about arguments before the Supreme Court debating whether medical residents count as employees or students for tax purposes. The distinction has financial implications because if ruled to be workers, hospitals must contribute money to Social Security and Medicare for residents. It also has more philosophical consequences related to how faculty interact with housestaff. Boston Medical Center along with other academic medical centers supported the side that considered residents students.
The Supreme Court ruled on Tuesday that medical residents are indeed employees and not subject to the student exemption for taxes. The decision was unanimous (except for Justice Elena Kagan, who recused herself). The petitioner’s claim that 80-hour work weeks constitute part of residents’ educational training proved unpersuasive. The justices ruled that residents are just the type of workers that Congress had in mind when mandating that employers contribute taxes on wages to employees.
The opinion could mean up to a $1 billion in additional costs that teaching hospitals must bear. I can understand why BMC joined the Mayo Clinic’s case in defending the student status of residents, but they had a tricky distinction to make. From the outside, residents’ work resembles the duties of any regular employee. Even with supervision from attending physicians, they are moving beyond student into the realm of professionals.