[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FILED

F O R THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS

ELEVENTH CIRCUIT

MAY 18, 2007

THOMAS K. KAHN

N o . 06-11693

CLERK

D . C. Docket No. 02-22715-CV-ASG

U N IT E D STATES OF AMERICA,

Plaintiff-Appellee,

versus

MOUNT SINAI MEDICAL CENTER

OF FLORIDA, INC.,

Defendant-Appellant.

A p p e al from the United States District Court

fo r the Southern District of Florida

(M a y 18, 2007)

B e fo r e BIRCH and PRYOR, Circuit Judges, and COVINGTON,* District Judge.

B I R C H , Circuit Judge:

*

Honorable Virginia M. Hernandez Covington, United States District Judge for the

Middle District of Florida, sitting by designation.

T h e issue presented in this case is a question of first impression for this C ircu it: are medical residents eligible to assert the "student exemption" from F ed eral Insurance Contributions Act ("FICA") taxation found in 26U.S.C. § 3 1 2 1 (b )(1 0 )? We hold that the services performed by medical residents are not categ o rically ineligible for the student exemption from FICA taxation. As a result, w e VACATE the summary judgment and REMAND for further proceedings co n sisten t with this opinion.

I. BACKGROUND O n 18 September 2002, Plaintiff/Appellee United States of America filed a o n e-co u n t complaint against Defendant/Appellant Mount Sinai Medical Center of F lo r id a , Inc. ("Mount Sinai") alleging that the Internal Revenue Service ("IRS") h ad issued an erroneous refund to Mount Sinai in the amount of $2,450,177.32.

The refund had been for FICA taxes paid and withheld by Mount Sinai for p aym en ts made to medical residents participating in Mount Sinai's Graduate M ed ical Education Program ("GMEP") for the tax years 1996 through 1999. The I R S had refunded these taxes to Mount Sinai in 2000 and 2001 and had included am o u n ts attributable to both the employer and employee portions of FICA taxes.

In response to the government's complaint, Mount Sinai answered that the tax es were properly refunded pursuant to the student exemption, which exempts f ro m FICA taxation "service[s] performed in the employ of . . . a school, college, o r university . . . if such service is performed by a student who is enrolled and reg u larly attending classes at such school, college, or university." 26U.S.C. § 3 1 2 1 (b )(1 0 ). The government moved for summary judgment, contending that, as a m atter of law, medical residents are never eligible to claim the student exemption.

The district court found, as a matter of law, that the student exemption to F I C A does not include medical residents, and, therefore, the Mount Sinai medical r es id e n ts ' remunerations were subject to FICA taxation. Accordingly, it granted th e government's motion for summary judgment. This appeal followed.

II. STANDARD OF REVIEW W e review an order of summary judgment de novo. See Morrison Rests., I n c . v. United States, 118 F.3d 1526, 1528 (11th Cir. 1997) (citation omitted).

III. DISCUSSION T h e sole issue on appeal is whether the district court erred in ruling that m ed ical residents enrolled in Mount Sinai's GMEP are ineligible, as a matter of law , to assert the student exemption to FICA taxation found in 26U.S.C. § 3 1 2 1 ( b ) (1 0 ) .

F IC A imposes a tax on wages that employers pay their employees for the p u r p o s e of funding the Social Security Trust Fund. See 26U.S.C. §§ 3101(a)-(b), 3 1 1 1 (a)-(b ); see also McDonald v. S. Farm Bureau Life Ins. Co., 291 F.3d 718, 7 2 1 (11th Cir. 2002) (describing the FICA tax generally); United States v. Mayo F o u n d . for Med. Educ. & Research, 282 F. Supp. 2d 997, 999-1000 (D. Minn.

2 0 0 3 ) (same). There are, however, numerous relationships that are exempted from F IC A taxation by statutory exceptions to the definition of "employment." 26 U .S .C . § 3121(b). Section 3121(b) lists a number of forms of service that are not "em p lo ym en t" within the meaning of the statute. The student exemption at issue p ro v id es that "the term `employment' . . . shall not include . . . service[s] p e r fo r m e d in the employ of . . . a school, college, or university . . . if such service is performed by a student who is enrolled and regularly attending classes at such sch o o l, college, or university[.]" 26U.S.C. § 3121(b)(10). The applicable reg u latio n s provide that an employee whose services are "incident to and for the p u rp o se of pursuing a course of study" has the status of a student. 26 C.F.R. § 313 1 2 1 (b )(1 0 )-2 (d ). The regulations also state that "the amount of remuneration for s er v ic es performed by the employee in the calendar quarter, the type of services p erfo rm ed by the employee, and the place where the services are performed are not m aterial." 26 C.F.R. § 31-3121(b)(10)-2(b).

Congress has amended 26U.S.C. § 3121 numerous times and there is a su b stan tial amount of legislative history, dating back to 1939. In reviewing the leg islativ e history, the district court found that Congress imposed mandatory FICA tax atio n on all medical residents when it repealed the statutory exclusion for m ed ical interns under the "intern exemption," formerly found in § 3121(b)(13).

See United States v. Mount Sinai Med. Ctr. of Fla., Inc., 353 F. Supp. 2d 1217, 1 2 2 3 - 2 7 (S.D. Fla. 2005).2 Specifically, the district court found that medical resid en ts have always been covered by the Social Security Act, id. at 1224-28, and th a t Mount Sinai's position violated the rules of statutory construction. Id. at 1 2 2 8 -2 9 . The district court relied on the Sixth Circuit's refusal to expand the in tern exemption to residents in St. Luke's Hospital Association of Cleveland v. U n ite d States, 333 F.2d 157 (6th Cir. 1964), as well as Congress's ensuing repeal o f the intern exemption. The district court declined to follow Minnesota v. Apfel, 1 5 1 F.3d 742 (8th Cir. 1998), and United States v. Mayo Foundation, 282 F. Supp.

2 d 997, two cases wherein courts had concluded that the residents qualified as stu d en ts. Mount Sinai, 353 F. Supp. 2d 1229.

O n appeal, Mount Sinai asserts that we should not consider legislative h is to r y because the student exemption is unambiguous. Alternatively, Mount Sinai p o sits that even if the student exemption is ambiguous, the district court failed to co n sid er the complete legislative history in deriving congressional intent. S p e c if ic ally , Mount Sinai contends that although the intern exemption was e lim in a te d , medical residents were permitted to assert other exemptions and that rev ersin g the district court would not render the original intern exemption s u p e r flu o u s . Moreover, Mount Sinai argues that the district court's ruling was co n trary to the government's regulations and guidance. Consequently, Mount S in a i seeks a reversal of the district court's ruling and a remand for a factual in q u ir y into whether Mount Sinai's residents qualify for the student exemption. In resp o n se, the government argues that the student exemption cannot, as a matter of law , apply to medical residents. Its arguments are largely based on the legislative h isto ry, structure, and intent of the student exemption, the intern exemption, and related provisions of the Internal Revenue Code.

We agree with Mount Sinai that the district court improperly relied on le g is la tiv e history without first determining whether the language of the statute was a m b ig u o u s . See Consumer Prod. Safety Comm'n v. GTE Sylvania, Inc., 447 U.S.

1 0 2 , 108, 100 S. Ct. 2051, 2056 (1980) ("[T]he starting point for interpreting a statu te is the language of the statute itself. Absent a clearly expressed legislative in te n tio n to the contrary, that language must ordinarily be regarded as c o n c lu s iv e ." ). Moreover, we hold that the statutory language of 26U.S.C. § 3 1 2 1 (b )(1 0 ) is not ambiguous. See United States v. Veal, 153 F.3d 1233, 1245 (1 1 th Cir. 1999) ("Review of legislative history is unnecessary unless a statute is in e s ca p a b ly ambiguous.") (citations and internal quotation omitted).

B y its plain terms, the student exemption does not limit the types of services th at qualify for the exemption. Whether a medical resident is a "student" and w h e th e r he is employed by a "school, college, or university" are separate factual in q u ir ie s that depend on the nature of the residency program in which the medical resid en ts participate and the status of the employer. Though tax exemptions "must b e unambiguously proved," United States v. Wells Fargo Bank, 485 U.S. 351, 354, 1 0 8 S. Ct. 1179, 1182 (1988) (citations omitted), it does not necessarily follow that M o u n t Sinai is, as a matter of law, excluded from attempting to prove that its resid en ts' services qualify for the student exemption.3 The government's argument rests largely upon an inference drawn from the adoption and subsequent repeal of th e separate intern exemption. As discussed, we do not find this inference, drawn fro m legislative history, persuasive given the clear import of the statute's text.

The government's attempt to look past the plain language of the statute in r elia n c e on the legislative history violates a basic principle of statutory in terp retatio n . "[W]hen the statute's language is plain, the sole function of the c o u r ts ­ a t least where the disposition required by the text is not absurd­is to enforce it according to its terms." Hartford Underwriters Inc. Co. v. Union Planters Bank, 5 3 0 U.S. 1 , 6, 120 S. Ct. 1942, 1947 (2000) (citations and internal quotations o m itte d ) ). We will not review the legislative history of this statute to create an am b ig u ity where there is none. See Ratzlaf v. United States, 510 U.S. 135, 147-48, 1 1 4 S. Ct. 655, 662 (1994) ("[W]e do not resort to legislative history to cloud a s ta tu to r y text that is clear.").

If Congress had wanted to make medical residents ineligible for the student ex em p tio n , it could have easily crafted a specific exclusion, as it did in 26U.S.C. § 3 1 2 1 ( b ) (6 ) ( B ) , which excludes medical and dental interns and residents employed b y the United States from consideration of the federal employment FICA ex em p tio n ,4 and § 3121(d)(3), which imposes mandatory FICA taxation on co m m issio n drivers, full-time life insurance salesmen, home workers, and traveling salesm en . See CBS Inc. v. Primetime 24 Joint Venture, 245 F.3d 1217, 1228 (11th C ir. 2001) ("[I]f Congress really meant in § 1005(a)(2)(B)(iii) of the Improvement A c t to grandfather only involuntary terminations resulting from court orders, then w h y did it say `any termination'? Why not simply say `any involuntary term in atio n ' or `any termination resulting from court orders'? It could have easily d o n e so, but it did not."). "The language of the statute is entirely clear; and if that is not what Congress meant then Congress has made a mistake and Congress will h a v e to correct it." See id. (citation omitted).

T h e government devotes a substantial portion of its brief to analyzing the stu d en t exemption's relation to the now-repealed intern exemption. The g o v ern m en t notes that Congress repealed the FICA exemption for medical interns in 1965. It contends that repeal of the intern exemption evidences Congress's in ten t to bring all young doctors-in-training within the scope of Social Security co v erag e, and, hence, FICA taxation. The government asserts it would be highly in co n g ru o u s for Congress to have repealed the intern exemption for those pursuing a one-year course of post-M.D. training, and yet continue to exempt the services of m e d ic al residents and fellows, who are pursuing several years of training after receiv in g their M.D. degrees.

T h e government's arguments with respect to the FICA scheme and the h isto ry of the separate intern exemption are unavailing. First, the government's relian ce on St. Luke's, 333 F.2d at 161, and Congress's subsequent repeal of the in tern exemption for the proposition that medical residents were not eligible for the stu d en t exemption is inapposite. St. Luke's never addressed the applicability of th e student exemption to medical residents; instead, the court analyzed whether m e d ic al residents qualified for the intern exemption, a distinct exemption then f o u n d in § 3121(b). The fact that Congress repealed the entirely separate intern e x e m p tio n in 1965 is irrelevant to the question of whether residents may qualify fo r the student exemption under the plain language of the statute. Second, the d istrict court's contention­that a plain reading of the student exemption would h a v e rendered the intern exemption superfluous­ ignores an important difference b etw een the two exemptions. The student exemption relies, in part, on the id en tities of the employees and employers to define the scope of the exemption, w h ereas the intern exemption applied to a type of service. The intern exemption w o u ld have been superfluous only if an intern were always a "student" and a "h o s p ita l" were always a "school, college, or university." Although all interns may b e students, not all hospitals are schools, colleges, or universities. As a result, in te rp r e tin g the student exemption according to its plain language does not render th e former intern exemption superfluous.

We reject the government's assertion that courts should defer to a "b rig h t-lin e" rule that medical residents can never be exempted from FICA tax atio n as students. See Apfel, 151 F.3d at 748; see also Ctr. for Family Med. v. U n ited States, 456 F. Supp. 2d 1115 (D.S.D. 2006) (holding that medical residents are not automatically ineligible for the student exemption); Mayo Found., 282 F.

S u p p . at 1018 (same). Instead, a case-by-case analysis is necessary to determine w h eth er a medical resident enrolled in a GMEP qualifies for a FICA tax exemption p u rsu an t to the student exemption in § 3121(b)(10). Specifically, § 3121(b)(10) r eq u ir es a determination as to whether Mount Sinai qualifies as a "school, college, o r university," and whether the Mount Sinai residents qualify as "student[s]." IV . CONCLUSION W e hold that the district court erred in ruling that medical residents enrolled in graduate medical education programs are precluded, as a matter of law, from seek in g to rely on the student exemption to FICA taxation in 26U.S.C. § 3 1 2 1 ( b ) (1 0 ) . Accordingly, we VACATE the summary judgment and REMAND fo r further proceedings consistent with this opinion.

2 The intern exemption provided an exemption for "service performed as an intern[] in the employ of a hospital . . . ." § 3121(b)(13) (repealed 1965).

3 In fact, as interpreted by the United States Department of Treasury, Section 3121(b)(10) contemplates a case-by-case approach to determining whether particular services qualified for the student exemption. See 26 C.F.R. § 31.3121(b)(10)-2; see also Univ. of Chicago Hosps. v. United States, No. 05-C5120, 2006 WL 2631974, at *5 (N.D. Ill. Sept. 8, 2006) (analyzing Treasury Regulation 31.3121(b)(10)-2 and finding that the regulation requires "a case-by-case approach to determining whether particular services qualified for the student exemption").

4 See United States v. Univ. Hosp., Inc., No. 1:05-CV-445, 2006 WL 2129816, at *6-7 (S.D. Ohio July 26, 2006) (discussing § 3121(b)(6) in relation to § 3121(b)(10)).