The Supreme Court heard arguments yesterday in a case with both financial and philosophical repercussions for medical schools. Employers and employees must pay a portion of their salaries to the federal government for Social Security and Medicare. Students working for the university while studying are exempt from the taxes.
In 2005, the U.S. Treasury Department ruled that medical residents do not qualify for the exemption, which was intended to support students working part-time. Medical residents work full-time and then some, so the government reasoned that they should be treated as employees and subject to the tax. At stake is $700 million in additional revenue.
The Mayo Foundation and the University of Minnesota appealed the decision, winning a round in court, but then a federal appeals court overturned the ruling. In appealing the case to the Supreme Court, the petitioners received friend of the court briefs from a consortium of academic medical centers including Boston Medical Center. They argue that residents are indeed students in that they attend classes, receive training, and learn about patient care.
The Supreme Court did not seem to indicate its thinking. The debate reminds me of the conflict between universities and doctoral students over unionization. In the end, many graduate students made the case that they were both students and employees and won the right to unionize. Medical residents already belong to unions, so how does that complicate the question of whether they are students or employees?