Tuesday, January 11, 2011

Once Again, University of Minnesota

General Counsel Takes It On The Chin

I've written before about this sorry performance by the U of M in trying to deny contributions to the retirement funds of residents.

See for example:

“It’s a lot of money every year out of our budget that we’d be able to either put into the pockets of the residents themselves or save,” Rotenberg said.

“We believe that our case is highly meritorious,” Rotenberg said. “We’re very pleased that the Supreme Court justices will give this case a very close look now.”

What a turkey...

From the Chronicle of Higher Education:

Medical Schools Must Pay Social Security Taxes for Residents, Supreme Court Rules

The U.S. Supreme Court ruled unanimously on Tuesday that medical schools must consider their residents as employees, not students, in a decision that will cost the institutions an estimated $700-million in federal taxes annually.

The ruling, written by Chief Justice John G. Roberts Jr., ends a longstanding dispute over whether medical colleges must pay the employer's portion of taxes for Social Security and Medicare for their residents.

Colleges generally do not have to pay the taxes, called FICA, for students who work at the institutions. In the past, that policy has also been applied to medical residents at teaching hospitals, even though they often work well beyond 40 hours a week.

The case, Mayo Foundation et al. v. United States, No. 09-837, involved the Mayo Clinic, in Rochester, Minn., and the University of Minnesota, which won a federal district-court ruling in 2008. In that opinion, the judge found that rules issued by the U.S. Treasury Department in 2005, excluding full-time medical residents from the student exception, were invalid because they were contrary to the law that created the Social Security system.

A three-judge panel of the U.S. Court of Appeals for the Eighth Circuit overturned that decision in 2009, saying the exception for students was meant only for those who worked part time while attending classes, but not medical residents, who are basically full-time employees of the teaching hospitals.

But on Tuesday the Supreme Court said quite simply that the Treasury Department's rules about student employees are a valid interpretation of the federal tax laws and deserve legal deference.
"The [Treasury] Department reasonably sought to distinguish between workers who study and students who work," the court ruled. "Focusing on the hours spent working and those spent in studies is a sensible way to accomplish that goal. The Department thus has drawn a distinction between education and service, not between classroom instruction and hands-on training."
Yes, Counsel Rotenberg, it was all about saving the students the money.  No it was all about the U not having to pay FICA.

As one of our former residents aptly put it:

Make no mistake about this...this decision is not about hurting the residents...Basically, the U of M and most academic medical centers have been screwing residents and fellows out of their retirement benefits in order to save money.

Former U of M Resident

1 comment:

Michael W. McNabb said...

Strike One: The Minnesota Supreme Court rejects the arguments of the U of M general counsel and rules that the state Data Practices Act and Open Meeting Law do apply to the University. Star Tribune Co. v. University of Minnesota Board of Regents, 683 N.W.2d 274 (Minn. 2004).

Strike Two: The Minnesota Court of Appeals rejects the argument of the U of M general counsel and rules that the decision of the U of M provost in a student disciplinary proceeding was arbitrary and capricious and denied due process to the student. Berge v. University of Minnesota, 2010 Minn. App. Unpub. Lexis 1002 (September 21, 2010), review denied, 2010 Minn. App. Lexis 704 (Minn. S.Ct. December 14, 2010).

Strike Three: The United States Supreme Court rejects the argument of the U of M general counsel and rules that the University must make FICA (social security) payments on the stipends of medical residents. Mayo Foundation & Regents of the University of Minnesota v. United States, No. 09-837 (January 11, 2011).