07- 0926
- cv ( L ) & 07- 0949
- cv ( Co n)

Un i t edSt a t es of

Ameri c a v. M emo ri a l Sloa n -Kett eri n g C a n c er C en t er 

### UN ITED STA TES C OUR T OF AP PE ALS F OR TH E S EC ON D C IR C U IT

____ ____ ____ ____ ____ _ August Term, 2007 (Argued: J uly

8, 2008 Dec ided: Marc h 25, 2009)

Docke t Nos. 07-0926-c v(L ), 07-0949- cv(Con)

_____________________ U NI TED S T A T ES O F A M ERI CA ,

Plaintif f-Appellee ,

- v. - M EM O RI A L S L OAN -KETTE R I NG C A N CER C ENTER , De fe nd an t- Ap pe lla nt.

_______________________ A L B ANY M ED I CA L C ENTER ,

Plaintif f-Appellant ,

- v. - U NI TED S T A T ES O F A M ERI CA ,

Defendant-

Appellee
.

_______________________

These two c ases, Albany Me dical Center v. United States (“ AMC ”) a nd United States v. Mem orial Sloan-Kettering C ancer Cente r

(“ Sloan-Kettering ”), de cided r espec tively by the United States District Courts for the Nor thern a nd Southern Districts of Ne w York, both ra ise the2

question of whethe r post-g raduate medica l residents ca n invoke the F eder al Insuranc e Contributions Act (“ FI CA”) tax exempti on for “ students.” In eac h case , the district court rule d that, as a matter of law , post-g raduate medica l residenc y prog rams ar e not “sc hools” and medic al residents a

re not “ students.” Sloan-Kettering raises the further

question of whethe r the monies that th e Canc e r C e nte r p ay s to its re sid e nts are “ sc ho lars hip s” and the re fo re e xemp t f

ro m F I CA taxes. The district court answe red “ no” to that question. We h old that bo th d istri c t c ourt s e rr e d in ru lin ga s a

matte r o f l aw that me dic a l r e sid e nts
are cate g orica lly

ineligible f

or the F I CA tax exemption for students. W e af firm the United States District Court for the Southern D istrict of NewYork, howe ver, insofa r as it deter

mined that the
mon ie s p a id b y

the Canc e r C e nte r t o me dic a l r e sid e nts are no t sc ho lars hip s. We r e mand bo th
case s to the respe ctive district cour ts for fur ther proc eeding s consistent with this opi nion.

_______________________ M A RK H. C H U RC H I LL , McDe rmott W ill & Emery L L P, W ashing ton, D.C. (J oel E. Cohen, McDe rmott W ill & Emery L L P, New Yor

k, New Y ork, Christopher Kliefoth, Sara

h E. Hanc ur, McDe rmott W ill & Emery L L P, W ashing ton, D.C., on the brief ), for Plainti

ff-Appellant Albany Medic al Center
. M A RK H. C H U RC H I LL , M c De rm ott Will & Em e ry

L L P, Wa sh ing ton , D .C. (C hr ist op he r K lie fo th, Te re sa M. Go od y , M c De rm ott

Will & Em e ry

L L P, Washington, D.C., J oel E. Cohen, McD ermott Wil l & Eme ry L L P, New Yor

k, New Y ork, on the brief

), for Defendant-Appe llant Memorial Sloan-Kettering Cancer Center
. T ER ES A E. M C L A U G H LIN , Attorney , Tax Divisi on, Depa rtment of Just ice, Was hin g ton , D .C. (R ic ha rd T. Mo rr iso n, Ac tin gAs sis tant A tto rn e y Ge ne ra l, Gi lb ertS . R ot henberg, A cti ng Dep ut y As si st antAt to rney

Gen eral , M ich ell e B. Smalling, Attorney , Tax Divisi on, Depa rtment of Just ice, Washing ton, D.C., on the brief , Glenn T. Suddaby , United States Attorney for the N orthern D istrict of New Y ork, of counsel), for Defendant-Appe llee United States of Ame rica
.The Honor able Da vid G. Trag er, of

the United States District Court for the Easter n * District of Ne w York, sitting by desig nation. 3 R O SS E. M OR R I S ON , Assistant United States Attorney (David S. J ones, Assistant United States Attorney , on the brief ), for Michae l J . Gar cia, United States Attorney for the Souther

n District of Ne w York, N ew Yor k, New Y ork, for Plaintif f-AppelleeUnited States of America
.

_______________________ B EF ORE: P OOLE R , H A LL , Circuit Judges , and T RAGER , District Judge. * Judge T RAG ER dissents in a separ ate opinion.

_______________________ H A LL , Circuit Judge : These two c ases, Albany Me dical Center v. United States (“ AMC ”) ( Scullin, J

.) and United States v. Me morial Sloan-Kettering Cancer Center (“ Sloan-Kettering ”) ( Heller stein, J .), de c ide d r e sp e c tiv e ly

by the Un ite d St ate s D ist

ri c t Co ur ts f or the No rt he rn and Southe rn Di str ic ts of Ne w York, both ra ise the question of whe ther post-g raduate medica l residents ca n invoke the Fe dera l I nsuranc e Contributions Act (“F I CA”) tax exempti on for “ students.” In eac h case , the district court ruled that, as a matter of law, post-graduate medica l residenc y prog rams ar e not “schools” a

nd medical r esidents ar e not “students.” Sloan-Kettering raises the further

question of whether the monies that the Cance r Center pay s to its residents are “ scholarships” a nd there fore exempt from FI CA tax es. The district c ourt answe red “ no” to that question. We h old that bo th d istri c t c ourt s e rr e d in ru lin ga s a

matte r o f l aw that me dic a l r e sid e nts
are cate g orica lly

ineligible f

or the F I CA tax exemption for students. W e af firm the District Court for the Souther

n District of Ne w York, how ever , insofar a s it determined that the monies pa id byMost of the fac ts are not in dispute, and those f acts that a re in dispute ar e noted. 1 4 the Canc e r C e nte r t o me dic a l r e sid e nts are no t sc ho lars hip s. We r e mand bo th c a se s to the ir respe ctive district cour

ts for fur ther proc eeding s consistent with this opi nion.
BACK GR OUND 1 I . O v er v i ew o f

Po s t- Gra d u a te Me d i ca l Re s i d en cy Pro g ra ms After completingmedical sc hool and re ceivinga doctor of medicine (“M.D.” ) degree , p r o s p e c t i v e p h ys i c i an s c o m m e n c e th e g r a d u at e p h a s e o f

th e i r m e d i c a l e d

u c at i o n . G e n e r a l l y, g raduate medica l education consists of a residenc y or fe llowship. Moststates, includingthe State of Ne w York, r equire phy sicians to complete a residenc y

prog ram of at least one year befor e bec oming e ligible f or a me dical license . Residency prog rams ty

pically last betwee n three
and fi ve y e ars . These r esidenc y

prog rams ar e ac cre dited by org anizations such as the Ac cre ditation Council for Gra duate Me dical Educ ation (“A CGME”). The ACGME requir es re sidency prog rams to be or g anized educational prog rams that combine a didactic c urriculum with direc t
e xpos ur e to p atie nt c are un de r t he su pe rv isi on of atte nd ingphy sic ians . A c c or din g ly , th e se pr og ra ms i nc lud e c la ssr oo m le c tur e s, da ily ro un ds wi th a

n atte nd ingphy sic ia

n, Gr and Round s in which experts pre sent rese arc h, morbidity and mortality

confe renc es, and r eadingassig nments. Residents are tested and e valuated a t times, and those residents who ha ve not mastere d nece ssary skills are g iven re medial instruction or re quired to re peat the pr og ram. B oth Memorial SloanKetter ing Ca

ncer Center ( “the Canc er Cente r”) and the Alba ny Medica l Center (“ AMC”) (collec tively , “the Hospitals”) claim that re sidents participate in patient car e only as a w ay of5

le arn ingho w t o c are fo r p atie nts ; th at any be ne fi t to the ho sp ita ls r e su lti ngthe re fr om i s e nti re ly incidental; that the hospitals do not meet staff ing ne eds throug h their re sidents; and that the ho sp ita ls c ann ot b ill fo r c are pr ov ide d b y a re sid e nt. Residents rec eive f

unds from the hospital. The H ospitals chara cter ize these monies as “a
sc ho lars hip or

fe llo ws hip to a id i n th e purs uit of the ir g ra du ate me dic a l e du c atio n” or a s a “stipend.” The Gover

nment char acte rizes these monies as c ompensation for the provision of service s. The Hospitals point out that the ACGME require s, as a c ondition of acc reditation, that the Ho sp ita ls p ro vid e re sid e nts wi th t he fi na nc ia l su pp or t ne e de d to e ns ur e the re sid e nts ’ pa rt ic ipatio n in

the re sid e nc y

pr og ra ms. Al tho ug h w e re fe r t o th e Canc e r C e nte r a nd AM C a s “ the Ho sp ita ls, ” the pr e c ise instit utional arra

ng ements ar e slig htly

more c omplicated than that ter m would sugg est. The Albany Medica l Center is a private cor poration that administratively links the Albany

Medica l College with the Albany

Medica l Center Hospital. Gra duate medic al prog rams, includingthe residenc y prog ram, a

re unde r the primar

y control of the Colleg e, but AMC and the Alba ny Medica l Center Hospital also par ticipate in the program. Colleg e fa culty supervise a

nd train the
re sid e nts , a

nd the re sid e nc y

pr og ra m is dir e c te d b y

the Col le g e ’s As so c iate De an f or Gr a du ate Me dic a l E du c atio n. Me mor ia l Slo an- Ke tte ri ngCanc e r C e nte r i s c omp ri se d o f t hr e e e nti tie s: Memorial Hospital for

Cance r and D iseases ( “Memoria l Hospital”), Sloan-Ke tteringInstitut e for Cance r Resea

rch ( “Sloan-Ke tteringInstitut e”) , and the Me morial Sloan-Ketter ing Ca ncer Center (“ the Canc e r C e nte r” ). Th e Canc e r C e nte r, a te a c hin gins tit

uti on , is a ff

ili ate d w iththe Wei ll Medica l Coll eg e of Corne ll University . The Canc er Cente r’s staf f phy sicians ar e all on the fa c ult y at Co rn e ll.6 II. Th e Hospitals’ Claim s and P roce edings B elow A. Co mmon Cl a i ms Both Hospitals ar g ue that they and their r esidents should not be requir ed to pay Fe dera l Ins ur anc e Contr ibutio ns Ac t ( “ F I CA ” ) p ay ro ll t a xes o n th e mon ie s p a id b y the Ho sp ita ls t o medical r esidents. FI CA funds Social Security throug h pay

roll tax es. One of its provisions, the
so-ca lled “student exception,” e x cludes fr om the definition of “e mploy ment” any

service s perf ormed by a student “in the e mploy

of a sc hool, colleg e, or unive rsity [,] . . . who is enrolled and re g ularly

attendingclasses at such school, colleg e, or unive rsity .” 26 U.S.C. § 3121(b)(10)
. Both Hospitals conte nd that work pe rfor med by their re sidents falls within this exception. The Canc e r C e nte r a lso re lie s o n F I CA ’s e xclu sio n o f “ sc ho lars hip s” fr om i ts d e fi nit ion of taxab le wag es. F I CA imposes a tax onl y on “wa g es,” which the statute de fines as “ all remune ration for employ ment,” with ce rtain exceptions. 26 U.S.C. § 3121(a). The Cance r Center claims that the fu nd s it pa y s to re sid e nts are no n- c omp e ns ator y sc ho lars hip s a

nd the re fo re do no t c on sti tut e “wa g es” unde r § 3121(a ).

B. Alban

y Medic al Center v. United Stat es AM C, whic h a c te d a s th e pa y ro ll a g e nt f

or the mon ie s p a id t o r e sid e nts , tr a dit ion a lly pa id FI CA tax es on those monies. Afte r an Eighth Circuit decision holding that re sidents were elig ible to apply

for a simil arly worde d student exception under 42 U.S.C. § 410(a) (10), see Minnesota v. Apfe l , 151 F.3d 742, 747- 48 (8th Cir. 1998), AMC filed a r efund a pplication for the FI CA tax es it had paid on re sident monies betwee n 1995 and 1999. The total amount of the7

claimed r efund—which included both the e mploy er a nd employ ee F I CA contributions—was approximately

$7.3 milli on. When the Interna l Revenue Ser vice ( “I RS”) did not act on the cla im, AMC filed a ref und lawsuit ag ainst the I RS i n the Northe rn District of Ne w York in De cembe r 2004. The Gover nment moved for summar y judgme nt in October 2005. It argued then, a s it does now, that AMC’s residents we re ine ligible f or the student exception as a matter of la

w. On January

10, 2007, the district court (Scullin, J .) g ra nte d s umm ary

jud g me nt i n f

avo r o f t he Go ve rnme nt. The district cour

t first ag ree d with the Gover nment that the languag e of the student exception was ambiguous. The cour t acknowle dg ed that re sidency prog rams had a

n educational component, but it observed that patient car e wa s also important. Be cause it was unable, in lig ht of these c onflicting aspec ts of residenc y prog rams, to deter

mine whether

medical r esidents wer e students by

ref ere nce to the statutory

text alone, the c ourt found it appropr iate to re view the leg islative history . The c ourt observe d that when e ng ag ing in this interpre tive exercise, it was
re qu ir e d to “ int e rp re t f

e de ra l so c ia l se c ur ity

le g isl atio n li be ra lly” and “ re so lve any

do ub ts i n favor of cove rag e rather than e x clusion.” Albany Me d. Ctr. v. United States , No. 04 Civ. 1399, 2007 U.S. Dist. L EXI S 1929, at *6 (N.D.N.Y . J an. 10, 2007). Turningto the leg islative history , the district court found that Congre ss had not intended medical r esidents to be elig ible for the stude nt exception. W hen Cong ress fir st established the stu de nt e xce pti on

in 1 93 9, it a lso e na c te d a se pa ra te e xemp tio n f

or wo rk do ne by po st- g ra du ate
me dic a l inte rn s. In 1 96 5, ho we ve r, Con g re ss e lim inate d th e me dic a l inte rn e xce pti on . F ro m th is his tor y , th e dis tr ic t c ourt

c on c lud e d th at Co ng re ss h a d inte nd e d th e e xce pti on s to be na rr ow ly
c on str ue d. I t f ur the r f ound that if the stu de nt e xce pti on

we re int e rp re te d a s in c lud ingre sid e nts ,8

the int e rn e xce pti on

wo uld have be e n r e dund ant f

ro m th e sta

rt . Wary of int e rp re tin gthe statut e in a manner

that rende red some of

its langua g e surplusag e, the district cour t ruled that medica l interns (a nd there fore medical r esidents) ha d never been e ligible f

or the student exception. Ba sed on its finding that residents we re ine ligible f or the student exception as a matter of law, the dis tr ic t c ourt

g ra nte d s umm ary

jud g me nt t o th e Go ve rnme nt.

C. Mem orial S

loan-Ketterin g Cancer Center v. United States The Canc er Cente r also filed a ref und application with the I RS. The Cancer Center pr e mis e d it s r e qu e st f

or a re fu nd on tw o a sse rt ion s. F ir st, it c la ime d th at th e mon ie s th at it pa id to r e sid e nts we re “ sc ho lars hip s” un de r t he statut e and

the re fo re no t su

bje c t to F I CA . Se c on d, it argued that re sidents were elig ible for the stude nt exception to FI CA. The I RS gra nted the application and r efunde d FI CA tax es that the Canc er Cente r had pa id betwee n 2001 and 2003. On J anuar

y 3, 2006, the Gover

nment reve rsed its position and sued to rec over the ref unded F I CA tax es. Ten months later , the Gover nment moved for summar y judgme nt, arguing that ( 1) the mon ie s p a id b y the Canc e r C e nte r t o r e sid e nts we re no t sc ho lars hip s, be c a us e residents a

re r equire d to perfor

m service s in ex chang e for the funds, and ( 2) re sidents are ineligible f

or the student exception as a matter of la

w. With respect to the Canc er Cente r’s scholarship c laim, the Gover nment argued that the Canc er Cente r’s re sidency contra cts requir e its re sid e nts to p ro vid e patie nt c are se rv ic e s, and thu s th e mon ie s p a id b y

the Canc e r C e nte r t o residents c ould not be considere d “schola rships.” The district cour

t (Heller stein, J

.) issued an or al dec ision. At the start of the hea ring , the court e x presse d some skepticism of the Canc er Cente r’s a ssertion that it did not benefit from the9

patie nt c are se rv ic e s p ro vid e d b y re sid e nts . T he c ourt

no te d th at, d

ur ingthe e arl y

y e ars of the ir
c are e rs , p ro fe ssi on a ls o ft e n le arn mor e fr om t

he ir e mpl oy me nt p os iti on s th an th e y

c on tr ibute in those positions, butthe cour t also told the Cancer

Center’ s counsel that “[y ]ou can’t say the ho sp ita l do e sn ’t

be ne fi t f ro m th e re sid e nts .” Whe n c ouns e l r e sp on de d th at th e Canc e r C e nte r d id not bill patients for car e provide d by residents, the district c ourt asked whether the cost of the resident se rvice s might be built into the cost of other hospital fe es and state d that the Cance r Ce nte r h a d n o w ay

to p ro ve oth e rw ise . U nli ke sc ho lars hip s, the c ourt no te d th at to re c e ive the se monies, “[t] here ’s no nee ds test” or a ny other “ set of conside rations that ar e customar y for a war d of scholar ships.” After extensive questioning by the cour t and leng thy

arguments by

both sides, the district court he ld that “the g overnme nt is entitl ed to summary judgme nt and that FI CA was payable on the compensation paid to residents and other fellows . . ..” I

n so doing, the court fir st ruled that the monies paid to reside nts were not scholarships bec ause r esidents wer e re quired to provide patie nt c are se rv ic e s in

re tur n f or the fu nd s. Mo vin gon

to t he stu de nt e xce pti on , th e c ourt he ld that r e sid e nts we re no t st

ud e nts and

c ou ld n ot i nv ok e the stu de nt e xce pti on . T ho ug h it no te d, in passing , that “by

rea son of the contr act dr awn up with a r esident, the re sidents are not students,” it f oc us e d o n th e le g isl ativ e his tor y and fo un d th at Co ng re ss h a d inte nd e d F I CAto a pp ly to residents. “ The amounts paid to them for the purpose of the a ct ar e conside red c ompensation. The fa ct that they

have a nother motive as we ll is beside the point . . ..” The c ourt, there fore , g ra nte d s umm ary

jud g me nt t o th e Go ve rnme nt.On Dec ember 21, 2004, the I RS i ssued an amended ve rsion of the student exception 2 regulation that restricte d its availability and more specific ally

limit ed its applicability

to medical residents. Student FI CA Ex ception, 69 F ed. Reg . 76404 (De c. 21, 2004) ( to be codifie d at 26 C.F.R. Pt. 31). The amendme nt imposed new re quirements for instit utions claiming to be “schools,” a

nd in the course of doingso it rejecte d commentar y in favor of

consideringteac hing hospitals to be schools. Id. at 76405. The ne w re g ulation includes a list of examples, and one of those examples addre sses wh e the r m e dic a l r e sid e nts are e lig ibl e fo r t he stu de nt e xce pti on . T he e xamp le de sc ri be s a situation that would li kely include the r esidenc y

prog rams at issue he re: Employ ee E is employ ed by University

V to provide patient car e ser vices at a teac hing ho sp ita l . .
. . a s p art

of a me dic a l r e sid e nc y

pr og ra m . . . . Th e re sid e nc y

pr og ra m . . . is acc redited by

the Acc reditation Counsel for G raduate Medica l Education. Upon c omp le tio n o f t

he pr og ra m, E wi ll r e c e ive a

c e rt if ic ate of c omp le tio n, and

be e lig ibl e to sit for an e x amination require d to be ce rtified by a re cog nized org anization in the medical sp e c ia lty . E ’s no rm a l w or k s c he du le , whic h in c lud e s se rv ic e s h avin gan e du c atio na l, instructional, or trainingaspec t, is 40 hours or more pe r we ek. 26 C.F.R. § 31.3121(b)( 10)-2( e)( 4)(I ) (2004)
. The re g ulation unambiguously makes c lear

that residents e nrolled in such a pr og ram wo uld no t be c on sid e re d s tud e nts : 10 DI SCU SSIO N We r e vie w “ a

g ra nt o f s umm ary

jud g me nt de novo .” Rubens v. M ason , 527 F.3d 252, 254 (2d Cir. 2008).

I. The Stu dent Exception A. The Statutory and Regulatory Text FI CA imposes pay

roll tax es on “w ag es,” which it defines a s “re muneration for employ ment,” with ce rtain exceptions. 26 U.S.C. § 3121(a). The student exception ex cludes fr om t he de fi nit ion

of “ e mpl oy me nt” any

“ se rv ic e pe rf

or me d in the e mpl oy

of
. . . a sc ho ol,
c oll e g e , o r u

niv e rs ity
. . . if su c h s e rv ic e is p e rf

or me d b y a stu de nt who is e nr oll e d a nd re g ula rl y attendingclasses at such school, colleg e, or unive rsity .” 26 U.S.C. § 3121(b)(10) . At the time of the e ve nts at is su e in t

he se c a se s, the imp le me nti ngre g ulatio ns state d th at “ [t]he te rm ‘s c ho ol, 2In this ex ample, E is employ ed by V, a sc hool, colleg e, or unive rsity within the meaning of pa ra g ra ph(c ) o f t his se c tio n. Ho we ve r, E’ s n or ma l w or k s c he du le c a lls fo r E to perf orm servic es 40 or more hours per wee k. E is theref

ore a full-time employ ee, a

nd the fac t that some of E’s ser

vices have an e ducational, instructional, or trainingaspec t does not affe ct that conc lusion. . . . According ly , E’s ser vices a re not e x cepte d from employ ment under se ction 3121(b)( 10) and the re is no nee d to consider other rele vant fac tors, such as whe ther E is a pr ofessional e mploy ee or whether E is eligible f

or e mpl oy me nt b e ne fi ts. Id. § 31.3121(b)( 10)-2( e)( 4)(ii). Be cause the re g ulation applies only “to servic es per formed on or afte r April 1, 2005,” id. § 31.3121(b)( 10)-2( f), howe ver, w e do not apply it or consider it her e. 11 c oll e g e , o r u

niv e rs ity ’ .
. . is t o b e take n in its c omm on ly

or g e ne ra lly a c c e pte d s e ns e .” 26 C.F .R. § 31.3121(b)( 10)-2( d). The r egulation further stated that whe ther a

n individual was a student depende d on “the ba sis of the relationship of such employ ee w ith the org anization for which the service s are perf

ormed” : An employ ee who perf

orms service s in the employ of a sc hool, colleg e, or university , as an inc ident to and for the purpose of pursuinga cour se of study at such school, colleg e, or unive rsity has the status of a

student in the perf

ormanc e of su c h s e rv ic e s. Id. § 31.3121(b)( 10)-2( c). “ [T] he amount of r emuner ation for se rvice s perf ormed by the employ ee . . . , the ty

pe of se rvice s perf

ormed by the employ ee, a

nd the place wher e the se rvice s
are perf ormed a re immater ial.” Id. § 31.3121(b)( 10)-2( b). Instead, e ligibility for the e x ception depends on “ (1) the c hara cter of the org anization . . . as a school, colleg e, or unive rsity . . . , and (2) the status of the employ ee a s a student enr olled and re g ularly attendingclasses . . . .” Id.

B. Textual Am bigu ity B oth dis tr ic t c ourt s f

ound thi s st atut or

y and re g ulator y fr ame wo rk

ambi g uo us a s to wh e the r m e dic a l r e sid e nts c an a pp ly fo r t he stu de nt e xce pti on , a

nd bo th c ourt s c on se qu e ntl y12

relied on the leg islative history of the student exception to find that medica l residents ar e cate g orica lly

ineligible. T he first que stion we fac e, ther efor e, is whethe r the statute is ambiguous wi th r e sp e c t to me dic a l r e sid e nts ’ e lig ibi lity fo r t he e xce pti on , f

or “ [o]nl y if we dis c e rn

ambi g uit y do we r esort . . . to ca

nons of statutory

construction . . . [and] to l eg islative history ,” Daniel v. Am. Bd. of Eme rgency

Med. , 428 F.3d 408, 423 ( 2d Cir. 2005) (citations omitted). The Hospitals ar g ue that the student e x ception is not ambig uous, as it clear ly establishes that students who work for the educ ational institut ions they attend ar e exempt from FI CA. They point out that the langua g e of the student exception consists of “basic, e asily understood wor ds,” and they contend that whe ther medic al re sidents are “students” is there fore a question of f act rathe r than a

question of law. The Gover nment first responds that if the term “student” has an unambig uous meaning , that meaningdoes not enc ompass residents, who a re not “ students” as that term is g ener ally

used. The G overnme nt believes the statute is ambiguous, howe ver, be c a us e it d oe s n ot d e ta il the c ir c ums tanc e s th at make an in div idu a l a stu de nt a nd do e s n ot, on

its fa c e , a ns we r t he qu e sti on

of wh e the r m e dic a l r e sid e nts are stu de nts . In United States v. Mount Sinai Me dical Center of Florida , 486 F.3d 1248 ( 11th Cir. 20 07 ), the El e ve nth

Cir c uit a dd re sse d th e same qu e sti on . T he re , th e dis tr ic t c ourt ha d lo ok e d to leg islative history

and conc luded that medica l residents we re c ateg orica lly ineligible f

or the student exception. Id. at 12 51 . T he El e ve nth Cir c uit he ld t hat th e dis tr ic t c ourt

ha d e rr e d whe n it “re lied on leg islative history without first determiningwhether the languag e of the statute was ambig uous.” Id. The c ourt found that the statutory meaningwas “ plain” and that “[w] hether a
m e d i c a l r e s i d e n ti s a

‘ s tu d e n t ’ an d

w h e th e r h e i s e m p l o ye d b y a ‘ s c h o o l , c o l l e g e , o r

un i v e r s i ty’
are separ ate f

actua l inquiries that depend on the nature of the residenc y prog ram in which theOn re mand, the district cour t found that the re sidents at Mount Si nai Medica l Center 3 met the def

inition of “students” and that Mount Sinai qualified as a “school, c olleg e, or university ” for

purposes of the FI CA student exception. Un ite d S tates v . M ou nt S ina i M e d. Ctr

. of Fla. , No. 02 Civ. 22715, 2008 U.S. Dist. L EXI S 57808, at *6 (S.D. Fla. July 28, 2008). The district court obser

ved that Mount Sinai, as a tea chinghospital, “play s a vital function in today ’s world of graduate medica l education” and that “[n]o other instit utions in t he United States, other than teac hing hospitals like Mount Sinai, carr y out this essential role and f unction.” Id. The court a lso found that the “tippingpoint” for the stude nt Ex emption from FI CA tax es is “the completion of the full re sidency (or f ellow) program . . . at a teac hing hospital . . ..” Id. at *7-8. Although the statute ana ly zed in Apfel

perta ins to the definition of employ ment for 4 purp os e s o f p ro vis ion s o f t he so c ia l se c ur ity

statut e c ov e ri ngbe ne fi ts, we have no oc c a sio n to addre ss the question of whethe r our holdingwith respec t to 26 U.S.C . § 3121(b)( 10) has a ny be ari ngon

e lig ibi lity

fo r b e ne fi ts. 13 medical r esidents par

ticipate and the status of the employ er.” Id. at 12 52 . T he El e ve nth Cir c uit 3
re fu se d to “ re vie w the le g isl ativ e his tor y of thi s st atut e to c re ate an ambi g uit y wh e re the re is none.” Id. The Eig hth Circuit reac hed a similar c onclusion in Minnesota v. Apfe l , 1 51 F .3 d 7 42 (8 th Cir. 1998), the issuance of which ha s spurred the curr ent wave of litigation over the status of medical r esidents. In Apfel , the Eig hth Circuit considered whether medical r esidents wer e exempt from social secur ity taxes under an a g ree ment betwee n Minnesota and the f eder al g overnme nt, the terms of whic h wer e g overne d by a statute c ontaining a

n identically

worde d student exempti on to the one at issue he re. Id. at 747 (discussingstudent exception provision of 4 42 U.S.C. § 410(a)(10) ). The E ighth Circuit first he ld that no tax es we re due based on the interpre tation of a c ontrac t betwee n the Gover nment and the State. Id. Then, howe ver, the court revie wed the district c ourt’s alter native holdingthat medical r esidents fe ll under the student exception. Id. The Eig hth Circuit rejec ted the Gove rnment’s a rgument that residents we re
c ate g or ic a lly

ine lig ibl e fo r t

he e xce pti on , h old ing

that e lig ibi lity

de pe nd e d o n “ a

c a se -b y -c a se14

examination” to determine whe ther re sidents’ relationship wit h the hospital was “pr imarily for educational purposes or pr imarily to ear n a living.” Id. at 748. The c ourt then af firmed the district court’s findingthat the re sidents fell within the scope of the exception. Id. Th e Sixth a

nd Se ve nth Cir c uit s h ave re c e ntl y

joi ne d th e El e ve nth

and Ei g hth Cir c uit s in ho ldi ngthat th e stu de nt e xce pti on is n ot p e r s e ina

pp lic a ble to m e dic a l r e sid e nts . Un iv . o f Ch i. Hosp. v. United States , 545 F.3d 564 ( 7th Cir. 2008). The Seventh Circuit conc luded that the statute’s silence on the spec ific issue of whe ther medic al re sidents qualify for the stude nt exception did not amount to ambiguity
. Id. Thus, it was not persua ded by the Gover

nment’s arguments based “ on infere nces dr awn f rom statutory

and leg islative history .” Id. at 567. Rathe r, the Se ve nth

Cir c uit he ld t hat e ve n if

it w e re to c on c lud e that th e statut e wa s ambi g uo us , it w ou ld “ tur

n f ir st t o th e a

pp lic a ble Tr e a sury

Re g ula tio n, ” wh ic h “ pr e sc ri be s a c a se -s pe c if

ic te st fo r whe the r t

he stu de nt e xce pti on

a pp lie s” and

re nd e rs imm ate ri a l th e “ amou nt t he e mpl oye e is paid, the ty

pe of se rvice s perf

ormed, a nd the place wher e ser

vices a re pe rfor med.” Id. at 568 (citing26 C.F.R. § 31.3121(b)( 10)-2)
. Simi larly , the Six th Circuit has conclude d that, while the mea ning of “student” is a le g al issue, the question of whe ther pa rticular r esidents ar e students is a fa ctual one. United States v. De tro it M

e d. Ctr

. , - -- F .3 d -

-- , 2 00 9 WL 46 55 43 , at *6 (6 th C ir . F e b. 26 , 2 00 9) . T he Sixth Circuit observed that the “statute doe s not define ‘ student’ but mere ly specifie s where and how the student must be studying f or the e x emption to apply .” Id. at *5 . T he Sixth C ir c uit loo ke d to th e o r d in ar

y me an in go f

th e w o r d “ s tu d e n t” an d

th e T r e a s ur

y r e g u la ti o n , w h ic h“ s ay s th at ‘ [a ]n employ ee who perf

orms service s in the employ of a sc hool, colleg e, or unive rsity , as an incident to and for the purpose of pursuing a course of study at such school, c olleg e, or unive rsity has the15

status of a student in the per formanc e of suc h service s.’” Id. (quoting 26 C.F.R. § 31.3121(b)( 10)-2( c)) (empha sis added in De tro it M e d. Ctr

. ). Thus, to deter

mine whether

the residents we re students, the c ourt “ne ed[ed] to know what the residents in the program do a nd under what circ umstances.” Id. We ag ree with the Six th, Seventh, and Eleve nth Circuits that the statute is unambiguous and that whe ther medic al re sidents are “students” a nd the Hospitals “schools” is a question of fac t, not a question of law. The statute expressly define s which individuals fall within the scope of the stu de nt e xce pti on : st ud e nts wh o a

re “ e nr oll e d a

nd re g ula rl y atte nd ingc la sse s. ” 26 U. S.C. § 3 12 1( b) (1 0) . It a lso e sta bli sh e s th e ty

pe s o f e mpl oy

me nt t hat qu a lif y fo r t he stu de nt e xce pti on : “ser vice pe rfor

med in the employ

of . . . a sc hool, colleg e, or unive rsity .” Id. Th is l angua g e is
no t ambi g uo us , a

nd in t he ir e ff or t to inv ok e the stu de nt e xce pti on , th e Ho sp ita ls d o n ot u rg e us to
a do pt a n unu su a l or

str a ine d inte rp re tatio n o f t he statut or

y te xt. T he y

se e k o nly

the op po rt

un ity to prove, through the introduction of evide nce, that their reside nts come within the terms of the te xt. T he Go ve rnme nt’ s p ri mary argume nt i s th at th e fa c t Co ng re ss r e pe a le d a se pa ra te exemption for service s perf ormed by hospital interns in 1965 demonstrates that Cong ress did not believe that medical re sidents would fall within the scope of the student exception. L ike the Eleventh Circuit, “w e [will] not resort to leg islative history to cloud a statutory

text that is clear .” Ratzlaf v. United States , 5 10 U. S. 1 35 , 1 47 -4 8 ( 19 94 ); see also Mount Sinai , 486 F.3d at 1252. Ev e n if we we re to f

ind ambi g uit y in t he statut e , th e me tho d f

or re so lvi ngthe ambi g uit

y is found in the implementing r egulations. Those regulations require courts to g ive the ter m “school, c olleg e, or unive rsity ” “its commonly or g ener ally

acc epted” meaning . 26 C.F.R. § 31 .3 12 1( b) (1 0) -2 (d ). Th e re g ulatio ns fu rt he r r e qu ir e c ourt s to de c ide wh e the r a n in div idu a l is a16

“ stu de nt” by

e xami nin gthe un iqu e c ir c ums tanc e s su rr ound ingthe ind ivi du a l’ s r e latio ns hip wi th the school, including“the ba sis of the relationship of such employ ee w ith the [ school],” “the char acte r of the or g anization . . . as a school, colleg e, or unive rsity ,” and “ the status of the employ ee a s a student enr olled and re g ularly attendingclasses.” Id. § 31.3121(b)( 10)-2( c). The Go ve rnme nt d oe s n ot a

rgue that th is r e g ulatio n c on fl ic ts w iththe le g isl ativ e his tor y or is oth e rw ise inv a lid . In a

ny e ve nt, a s th e Se ve nth

Cir c uit he ld, “ we ne e d n ot . . . atte mpt to
rec oncile the statutory

and leg islative history

of the intern e x ception with the student exception or the a pplicable Tr easur

y Regulation,” bec ause “ the statute unambiguously does not cate g orica lly

exclude medical r esidents from e ligibility for the stude nt exception.” Un iv . o f Ch i. Hosp. , 545 F.3d at 570. Be cause the student exception is unambiguous, both district courts e rre d in ruling that
me dic a l r e sid e nts are ine lig ibl e fo r t he e xce pti on

a s a matte r o f l aw. We a g re e wi th t he El e ve nth Cir c uit that “ [w]he the r a

me dic a l r e sid e nt i s a

‘s tud e nt’ and

wh e the r h e is e mpl oye d b y a ‘s c ho ol, colleg e, or unive rsity ’ ar e sepa rate fac tual inquiries that depend on the nature of the re sidency prog ram in which the medical r esidents par ticipate and the status of the employ er.” Mount Sinai , 486 F.3d at 1252. Accor dingly , both case s must be remande d for “ a par ticularized revie w of whether [t he Hospitals’] medical re sidents qualify for the stude nt exclusi on.” Un iv . o f Ch i. Hosp. v. United States , No. 05 Civ. 5120, 2006 U.S. Dist. L EXI S 68695, at *14 (N.D. I ll. Sept. 8, 2006), aff’d

545 F.3d 564 ( 7th Cir. 2008).17

C. Legislative History Al tho ug h w e fi nd

the statut e un ambi g uo us and ru le in f avo r o f t he Ho sp ita ls o n th at ba sis , we take a moment to addre ss the Gover nment’s claim that if we wer e to look to the leg islative his tor y , w e wo uld

ru le in f avo r o f t he Go ve rnme nt. When Congre ss first enac ted the F I CA tax in 1935, it did not include the student exception or any

other re levant exception. 1933 Social Secur ity Act, § 901, 49 Stat. 639 (1935). In 1939, Congr ess amende d the statute and a dded the pr ecur sor to the student exception. Interna l Re ve nu e Cod e of

19 39 , § 14 26 (b )( 13 ), 53 Stat. 1 38 4- 85 (1 93 9) . A t th is t ime , Co ng re ss a lso added the intern exception, which e x cluded f rom the def

inition of “employ

ment” “se rvice perf ormed a s an interne [si c] in the employ of a hospital by

an individual who has c ompleted a four year s’ cour se in a medic al school cha rtere d or appr oved pursua nt to St ate law .” Id. at 1385. The Gove rnment ar g ues that the c oexis tence of the student exception and the inter n exception demonstrates that Congre ss did not believe that medica l interns would fall within the scope of the student exception, and that, a fo rti or i , medical r esidents—who ar e eve n further remove d from enrollment in medica l school classroom studies—would not fall within the student exception either. A ccor ding to the G overnme nt, if medical interns a nd medical r esidents wer e elig ible for the student exception, the intern exception would have been sur plusag e. F if te e n ye ars a ft e r C on g re ss e na c te d th e tw o e xce pti on s, ho we ve r, St. Luk e ’s Ho sp ita l in Cleveland brought a lawsuit claimingthat medical r esidents fe ll within t he intern e x ception. See St. Luke’s Hosp. Ass’n of Cleve land, Ohio v. United States , 3 33 F .2 d 1 57 (6 th C ir . 1 96 4) . St
. Luke’s a rgued that its residents we re “ doctors-in-tr aining ” and the ref ore w ithin the terms of the intern exception. Id. at 158. Evidenc e showe d that residenc y prog rams had e x panded sinc e18

1939. Id. Whil e the te rm “ re sid e nt, ” in 1 93 9, “ re fe rr e d to a g ra du ate phy sic ian, lic e ns e d to prac tice medicine , who serve d on the [hospit al] staff” a nd who may

or may not have be en
un de rg oin gtr a ini ng , r e sid e nc y pr og ra ms i n 1 96 4 w e re de signe d “ fo r t ra ini ngof phy sic ians in specia liz ed bra

nches of medicine lea ding to e x amination and ce rtification by specia lty boards.” Id. at 161. Thus, while the ter m “intern” had come to indicate “graduate doctors,” the term “re sident-in-training ” had c ome to connote individuals “still in training status.” Id. The Six th Circuit held, however , that residents we re ine ligible f or the intern e x ception. Al tho ug h th e dis tin c tio ns be tw e e n me dic a l inte rn s a nd re sid e nts ha d b e e n “ su

bs tanti a lly reduc ed,” the two terms continued to desc ribe two discr ete c ateg ories of individuals, as they had when the inter

n exception was ena cted in 1939. Id. at 164. The c ourt ac knowledg ed that chang ing c ircumstance s might counse l in favor of expanding the inter

n exception to include residents, but it found that “mee ting these chang ed conditions, if indeed the re is wa rra nt for doing so at all, is the function of leg islation and not that of judicial interpre tation.” Id. The followingy ear , Congr ess re peale d the intern e x ception altog ether
. See Social Security Amendments of 1965, Pub. L . No. 89-97, § 311, 79 Stat. 286, 381. The House Report stated that extending Socia l Security cover ag e to medica l interns “would g ive youngdoctors an
e arl ie r s tart

in b uil din gup so c ia l se c ur ity pr ote c tio n a

nd wo uld he lp m any

of the m to be c ome ins ur e d und e r t

he pr og ra m at th e tim e wh e n th e y

ne e d th e fa

mil y surv ivo r a

nd dis a bil ity protec tion it provides.” H.R. Rep. No. 89-213 (1965) . The Repor t further states that Th e e ff e c t of thi s ame ndme nt i s to e xten d [F I CAc ov e ra g e ] to s uc h inte rn s unle ss the ir se rv ic e s a

re e xclu de d und e r p ro vis ion s o the r t ha n s e c tio n 3 12 1( b) (1 3) . T hu s, the servic es of a

n intern ar e cove red if he is employ ed by a hospital which is not exempt from income tax as an org anization described in se ction 501(c) (3) of the code. I f the intern is e mploy ed by a hospital which is exempt from income tax19

and which ha s a wa iver c ertificate in eff ect unde r sec tion 3121(k) of the c ode, he i s n o tex cl u d edfr o mco v er age b y s ec t i o n3 1 2 1 (b )( 3 )( B) o f t h e c o d e i f c o v er age was e ffe cted unde r such c ertificate. Id. Ac c or din gto t

he Go ve rnme nt, the e na c tme nt o f t he int e rn e xce pti on

—whic h r e fl e c ts a deter mination that interns (and, a fo rti or i , residents) a re ine ligible f

or the student exception—combined with the re peal of the intern e x ception—which r efle cts a de termination that interns (a

nd, a fo rti or i , residents) should be cover ed by the FI CA tax —demonstrate a cong ressional de termination that medica l residents ar e inelig ible for the stude nt exception. Thus, if we f

ind the statute ambiguous and look to leg islative history , the Gover nment believes we will find the leg islative history to require a rulingin its favor. We disag ree . The Gove rnment is corr ect in pointing out that tra ditional rules of construction, such a s the e x pr essi o u niu s c ano n a

nd the ru le a g a ins t surp lus a g e , s ug g e st that in 1 9 3 9 an d 1 9 6 5 , C o n g r e s s d i d

n o tb e l i e v e th atm e d i c a l i n t e r n s w e r e c at e g o r i c a l l y e lig ible for the student exception. But it does not follow that Congr ess consider ed medica l residents to be
c at e g o r i c a l l y ineligible for that e x ception. See M ount Sinai , 486 F.3d at 1253 (“The student exemption relies, in part, on the identities of the e mploy ees a nd employ ers to def

ine the scope of the exemption, wherea s the intern exemption applied to a ty pe of se rvice . The intern e x emption would have be en super fluous only if an intern w ere alway s a ‘student’ a nd a ‘hospital’ w ere
a lw ay s a ‘s c ho ol, c oll e g e , o r u

niv e rs ity .’ Al tho ug h a ll i nte rn s ma y be stu de nts , n ot a ll h os pit a ls
are schools, colleg es, or univer sities.”). The statement from the H ouse Report a ccompa nying the repe al of the inter

n exception “leave s open the possibility that interns might qua lify for other FI CA exempti ons.” Univ. of Chi. Hosp. , 5 45 F .3 d at 56 9. I t st ate s th at “ [t]he e ff e c t of thi s20

amendment is to extend covera g e under the Fe dera l Insuranc e Contributions Act to such interns unless their service

s are ex cluded unde r provisions other than [ the intern ex ception ].” H.R. Rep. No. 89-213, 216 (1965) (empha sis added). Congr ess has not def

ined the ter

m “student” such that a post-g raduate doctor c ould neve r be e lig ibl e fo r t

he e xce pti on . A s th e El e ve nth Cir c uit he ld, “ [t]he stu de nt e xce pti on wa s w ho lly unaff ecte d by the re peal of

the intern e x ception, and the repe al of the inter n exception impli ed nothing a bout whether

either inter

ns or re sidents might bringthemselves under the student exception.” Univ of Chi. Hosp. , 545 F.3d 569. We will not infer f rom a seque nce of

leg islative
e ve nts oc c ur

ri ngmor e tha

n f or ty y e ars a g o th at Co ng re ss i nte nd e d to da y ’s me dic a l r e sid e nts to be categ orica lly

ineligible f

or the student exception. As the Six th Circuit noted in St. Luke’s , the nature of medica l residenc y has cha ng ed over tim e . B e tw e e n 1 93 9 a

nd 19 65 , me dic a l r e sid e nts e vo lve d f ro m me mbe rs of

the ho sp ita l st a ff

int o tr a ine e s e ng a g e d in

a pr olo ng e d c ours e of

stu dy . T he Ho sp ita ls c la im that si nc e the n, re sid e nts have be come students and me dical ce nters have become schools. In support of that cla im, they have introduc ed evide nce that residenc y prog rams ar e ac cre dited, that the prog rams have a strong
e du c atio na l c omp on e nt, and that r e sid e nc y

is a pr e re qu isi te fo r m e dic a l li c e ns ur e . Co ntr ary to the Gover nment’s claims, which f

ocus on the mea

ning of the statute and a

n unstated (a

nd
unenac ted) c ong ressional intent, these c ases a re r eally about the natur e of mode rn re sidency prog rams and the relationships between re sidents and their hospitals. I f those programs ar e now schools and if re sidents are now students, Congr ess’s fa ilure to anticipate that development doe s not bar the hospitals fr om now applying f or such r ecognition.21 II. The Ca nc e r Ce nt e r ’s Sc hol ar ship Cl aim In a dd iti on

to t he stu de nt e xce pti on , th e Canc e r C e nte r a lso inv ok e s th e Sc ho lars hip
re g ulatio n. Th e Canc e r C e nte r r e lie s o n r e g ulatio ns int e rp re tin gthe g e ne ra l de fi nit ion of “ g ro ss income” unde r the Tax Code, which provide s, in releva nt part, that an individual may exclude from the c omputation of g ross income: any amount rec eived by

an individual as a sc holarship or fe llowship gra nt to the extent the indivi dual establishes that, in ac corda nce w ith the conditions of the g ra nt, su c h amou

nt w a s u se d f

or qu a lif ie d tu iti on

and re late d e xpe ns e s. 26 U. S.C. § 1 17 (b )( 1) . T he statut e fu rt he r p ro vid e s th at th e fe llo ws hip e xemp tio n s ha ll n ot a pp ly to “that portion of any

amount rec eived whic h repr esents pay ment for tea ching , rese arc h, or other service s by

the student requir ed as a

condition for re ceivingthe qualified sc holarship or qua lified tui tio n r e du c tio n. ” 26 U. S.C. § 1 17 (c )( 1) . T re a sury De pa rtme nt r e g ulatio ns pr ov ide that amounts paid or allowe d to, or on beha lf of, an individual to ena ble him to pursue studies or rese arc h are considere d to be amounts rec eived a s a scholar ship or fellowship g rant . . . if the pr imary purpose of

the studies or re sear ch is to further the educ ation and tra ining of the re cipient in his indivi dual ca pacity and the amount provided by

the g rantor f

or such pur

pose does not re prese nt compensation or pa y me nt f or [em plo y me nt] s e rv ic e s . . . . N e ith e r t he fa c t th at th e re c ipi e nt i s require d to furnish repor

ts of his prog ress to the g rantor, nor the fa ct that the results of his studies or re sear ch may be of some inc idental bene fits to the gr antor sh a ll, of its e lf , b e c on sid e re d to de str oy the e sse nti a l c ha

ra c te r o f s uc h amou

nt a s a sc ho lars hip or

fe llo ws hip g ra

nt. 26 C.F .R. § 1 .1 17 -4 (c )( 2) . T he Sup re me Court up he ld a pr ior ve rs ion of thi s r e g ulatio n in Bingler v. Johnson , 394 U.S. 741 (1969), and in doingso it commented that the re g ulations were
c on sis te nt w ith“ the or din ary un de rs tand ingof

‘s c ho lars hip s’ and

‘f e llo ws hip s’ a s r e lativ e ly disinterested, ‘no- strings’ educational gr ants, with no require ment of any substantial quid pro quo from the r ecipients.” Id. at7 5 1
. Inth e y ea rs fo l l o wi n g Bingler , “the numer ous courts that have22

c on sid e re d v ari ou s a sp e c ts o f t his iss ue have a lmo st unif or mly he ld t hat pa y me nts ma de to medical r esidents do not qualify for the § 117 e x clusion.” Field v. Comm’r , 680 F.2d 510, 513 (7th Cir. 1982) (c ollectingcase s). In addition to the statute and re g ulation, the I RS has also ruled in Notice 87- 31 that “the application of F I CA or FU TA depe nds on the nature of the e mploy ment and the status of the org anization.” I RS Noti ce 87- 31, 1987-1 C.B. 475. F urthermor e, “[w]here a portion of a scholarship is g rante d in return f or ser vices . . . the grantor must make a g ood faith allocation, ba se d o n a ll the fa c ts a

nd c ir c ums tanc e s, to d e te rm ine that po rt ion of the amou nt t hat r e pr e se nts compensation for servic es provided by the re cipient.” Id. “ On ly tho se amou

nts a llo c ate d to compensation for servic es provided by the re cipient ar e subjec t to the reportingand withholding require ments descr ibed in this paragraph.” In support of its motion for summary judgme nt, the Gover

nment focuse d on whether the residents re ceive d the funds as a scholarship, a

rguing that they

did not because their re ceipt of the funds is conditioned on the re quirement that the r esidents provide patient car e ser vices. F or support, it relied on the a

ppointment letter that the Cance r Center sent to residents whe n they
wer e chose n for the r esidenc y prog ram. The letter de scribes the residents’ r esponsibiliti es as fo llo ws : I t is ex pecte d as a me mber of the g raduate staff of Memoria l Hospital for Cance r and Allied Disease s y ou will develop a pe rsonal program of se lf-study and prof essional g ro wth w ithg uid anc e fr om t e a c hin gsta ff of the Ho sp ita l; participate in safe, effective and compassionate patient careunder superv ision as determined by theChief of Service or his /he r d esig ne e c om me ns uratewith y ou r le v e l of ad v an c e me nt a nd

re sp on sib ili ty ; pa rt ic ipate fu lly

in t he e du c atio na l a c tiv iti e s o f your p ro g ra m and , a s r e qu ir e d, a ssume responsibility

for tea chingand super

vising other

residents a

nd students; participate in the evaluation of the quality

of educ ation provided by the Prog ram; par

ticipate in institut ional prog rams and a ctivities involvi ngthe Hospital medica l staff a nd instit utional committees23

and counc ils, especially

those that relate to quality assura nce a nd patient ca

re r eview a c tiv iti e s; a

pp ly c os t c on ta inm e nt m e a su

re s in the pr ov isi on

of patie nt c are ; and

a dh e re to the rules a

nd regulations, Bylaws, and policy and proc edure s of the instituti on. Memorial Hospital for Canc er a

nd Allied Disease s ag ree s to provide a suitable e nvironment for me dic a l e du c atio n a

nd tr a ini ngin a c c or da

nc e wi th e sta

bli sh e d s tand ard s. Appendix at A-228, Un ite d S tates v . M e m’ l Sloa n-

Ke tte ring Ca nc e r Ct

r. , No. 07-0926-c v (2d Cir. May 23, 2007) (e mphasis added)
. B a se d o n th is l angua g e , th e Go ve rnme nt c on te nd e d th at th e e nti re ty of the mon ie s p a id t o
re sid e nts are g ive n c on dit ion a lly and that th e Canc e r C e nte r’ s r e sid e nts re c e ive no ne of the ir funds unless they

provide patient car e ser

vices. In response to the Hospitals’ asser tion that the residents c are for patients solely in order to lea

rn how to pra ctice me dicine, the Gove rnment pointed out that many

profe ssionals learn their

profe ssion through on- the-job training . The C an c e r C e n t e r d i s a g r e e d

w i thth i s c h ar a c t e r i z at i o no f th e s e r v i c e s th atr e s i d e n t s p r o v i d e . It argued that “[i]n t he agree ment it doesn’t say patient ca

re se rvice s, it say s experience [] patient
car e, much like they

have to e x perie nce grand r ounds, much like they have to e x perie nce
ever y thing e lse in the ag ree ment.” The district court agree d with the Gover nment, finding that “the a rgument is overpowe ringthat . . . the pay ments qualify

in whole for F I CA treatment.” We find no err or in the district court’ s ruling on this point. Any rea sonable fa ct finder
rea ding the appointment letter would unde rstand it to require that residents provide patient ca re service s as a c ondition of rece iving f unds from the Canc er Cente r. The Ca ncer Center doe s not seriously dispute that residents must provide patient c are . I t emphasizes that the purpose of requiringthat the re sident provide that ca re is educ ational. Nonethe less, we a g ree with the Go ve rnme nt t

hat th e e du c atio na l pu

rp os e of the se rv ic e re qu ir e me nt d oe s n ot c ha ng e the wa

y in which the r equire ment exacts a “substantial quid pro quo” from the r esidents, and c annot be24

char acte rized as a “ relatively disinterested, ‘no string s’” a rra ng ement. Bingler , 394 U.S. at 749- 50. Although the Cance r Center argues that the district cour t should have inquired into which po rt ion of the re sid e nts ’ c omp e ns atio n w a s c on dit ion e d o n p atie nt c a re and wh ic h p art

wa s n ot, the agree ment betwee n the re sident and the Canc er Cente r does not sepa rate the compensation amount into two gr oups, those that are conditional and those that a re not. The ag ree ment imposes the patient ca

re r equire ment as a c ondition on the resident’s status as a resident, a

nd thus
as a c ondition on the entirety of the c ompensation provided ther efor . And bec ause it appe ars that the Canc e r C e nte r’ s “ re sid e nt e du c atio n a nd patie nt c are se rv ic e s a

re ine xtri c a

bly int e rt wi ne d” “ it is unclear if any allocation would be possible.” United States v. Partners He althcare Sys., I nc. , Civ. No. 05-11576, 2006 WL6087284, at *7-8 (D . Mass. Sept. 30, 2008). The district c ourt pr op e rl y re fu se d to e ng a g e in a

fu rt he r i nq uir y int o whic h p or

tio n w a s c on dit ion a l.

III. Conclusi on We VACATE the judg ments of both district courts insofar as they ruled that medic al residents a

re ine ligible f

or the student exception as a matter of la

w. We AFF I RM the judgment of the United States District Court for the Southern District of Ne w York insofa r as it ruled that th e mo n ie s p a id

b y th e Ca n c e r Ce n te r to it s me d ic a l r e s id e n ts ar e n o t s c h o la r s h ip s . We REMAND both ca ses for f urther pr ocee dings c onsistent with thi s opinion.Moreove r, eve n acc eptingthe claim that the statutory languag e wa s unambig uous, the 1 chronolog y

or conte x tual history

of the re peal of

the intern e x ception and its re lationship to t he student exception, apart f rom any other sourc es of leg islative history , would be dec isive for me. Howeve r, I

find it unnece ssary

to rely on this principle in view of its unresolved a nd contested status. Compare Cohen, 498 F .3d at 116 (" if [the statutory text ] i s unambig uous, no further inquiry is nece ssary .") with United States v. Turkette, 452 U .S. 576, 580 (1981) (" I f the statutory l an g u a g e i s un amb i g u o u s , i nth e a b s e n c e o f a c l e ar l y e x p r e s s e d

l e g i s l at i v e i n t e n tt o th e c o n tr ar y, that languag e must ordinarily be re g arde d as conc lusive.") (empha sis added, quotation omitted) an d U n it e d St e e lw o r k e r s o f A me r ic a v . We b e r , 4 4 3 U
. S. 1 9 3 , 2 0 1 ( 1 9 7 9 ) ( " Inth is c o n te xt responde nt's r eliance upon a litera l construction . . . is misplaced. It is a familiar rule that a thing may be wi thi n th e le tte r o f t

he statut e and

y e t no t w ith in t

he statut e , b e c a

us e no t w ith in i ts s pir it nor within the intention of its makers." ) (quotation omitted). 25 TRA GE R, D istri c t Judg e , c on c ur ri ngin p art

and dis se nti ngin p art : Although I

ag ree that pay

ments made to re sidents cannot qualify as scholar ships, I
re sp e c tf ull y dis se nt f ro m th e pa

ne l' s c on str

uc tio n o f t

he stu de nt e xce pti on

fr om F I CAtaxes. My
c oll e a g ue s f

ind that th e te xt of

26 U. S.C. § 3 12 1( b) (1 0) un ambi g uo us ly a do pts a c a se -b y -c a se approa ch for

deter mining whe ther a

medical r esident qualifies f or the student exception. Unlike my colleagues, I

find the statutory

text ambig uous and re sort to leg islative history appropr iate. An d h e re Con g re ss u

nambi g uo us ly

e xpre sse d it s inte nt t

hat r e sid e nts are c ate g or ic a lly ine lig ibl e for the stude nt exception when it repe aled the r elated F I CA tax exception for interns in 1965 (the "inter n exception" a

nd the " 1965 amendment" ). Indeed, be tween the 1965 amendment a nd the 1 Ei g hth Cir c uit ' s d e c isi on

in M inn e so ta

v. Ap fe l, 1 51 F .3 d 7 42 (8 th C ir . 1 99 8) , a pe ri od of a lmo st 33 y ear s, Congr ess' s intent to make reside nts categ orica lly ineligible f

or the student exception appea rs to have be en cle arly

understood by

all rele vant par

ties. 26 U.S.C. § 3121(b)(10) - which def ines the student exception - uses e x tremely g ener al languag e. The rele vant portion exempts from FI CA tax ation any remune ration for

a " service p e r f o r m e d i nth e e mp l o y o f

. . . a s c h o o l , c o l l e g e , o r

un i v e r s i ty . . . i f

s u c hs e r v i c e i s p e r f

o r m e d b y a26

student who is enrolled a

nd regularly

attendingclasses at such school, colleg e, or
un ive rs ity
. . . . " 26 U. S.C. § 3 12 1( b) (1 0) . T he te xt is ambi g uo us in t hat it do e s n ot c le arl y define either the term " student" or the term " school, colleg e, or unive rsity ." T he fa ct that the statute uses terms that a

re pla in and simple at first g lance does not make it unambiguous. Ins te a d, we mus t f

oc us on the sp e c if

ic qu e sti on

be fo re the c ourt

and de te rm ine wh e the r t

he te xt, sta nd inga lon e , a llo ws fo r m or e tha n o ne re a so na

ble int e rp re tatio n. Whe the r a statut e is ambig uous depends on whe ther it has an " unambig uous meaningwith reg ard to the pa rticular dis pute in t

he c a se ." Rob ins on

v. She ll O il Co ., 51 9 U .S. 33 7, 34 0 ( 19 97 ). To be un ambi g uo us , a statut e mus t su

pp ly " ru le of de c isi on fi ne -gra ine d e no ug h s o th at it c on tr ols the ' pr e c ise question' at issue . . . ." Gene ral Elec . Co. v. Comm ' r of Interna l Revenue, 245 F .3d 149, 154 (2d Cir . 2 00 1) (q

uo tin gChe vr on

U. S.A . Inc . v . N atur a l Re so ur c e s D e fe ns e Counc il, Inc ., 46 7 U .S. 837, 843 n.9 (1984))
. Th e qu e sti on

dir e c tly po se d b y the pa rt ie s is wh e the r m e dic a l r e sid e nts are c ate g or ic a lly ine lig ibl e fo r t

he stu de nt e xce pti on

or wh e the r e lig ibi lity

sh ou ld b e jud g e d o n a

c a se -b y -c a se ba sis . T his qu e sti on

re qu ir e s u s to de te rm ine no t me re ly ho w the statut e tr e ats r e sid e nts but a lso at what leve l of g ener ality elig ibilit y

for the e x ception is dec ided. Conceptua lly , at least, the statute could judg e putative students (1) cate g orica lly , such that all re sidents are treated alike; (2) by pr og ra m, s uc h th at a ll r e sid e nts in a pa rt ic ula r p ro g ra m are tr e ate d a lik e ; or

(3 ) a s in div idu a ls, such that two individuals in the same program mig ht rec eive diff ere nt treatment de pendingon the ir ind ivi du a l c ir c ums tanc e s. Th e ba re te xt of the statut e do e s n ot u

nambi guo us ly

re so lve the matte r. Th e te xt itse lf
say s li ttl e a

bo ut at w hat le ve l of

g e ne ra lity

e lig ibi lity

sh ou ld b e de te rm ine d. I t is so sp are that it27

does not eve n enumer ate the c riteria to use in determiningwhether a per son is a "stude nt" or what instituti ons can be called a "sc hool, colleg e, or unive rsity ," le t alone spec ify at what leve l of g ener ality this decision is to be made. See 26 U .S.C. § 3121(b)(10). As the ma jority notes, the statut e do e s p ro vid e so me g uid anc e in t hat it sp e c if ie s th at on ly

stu de nts wh o a

re " re g ula rl y att end in g clas ses " may

qu ali fy andth at t hey

mu stwork fo r a "sch oo l, col lege, or u ni vers it y . . . . " Ma j. O p. at 16 . B ut t

he fa c t th at th e statut e pr ov ide s so me lim ite d guid anc e a s to wh o q ua lif ie s is not the same thingas spec ifying at what level of g ener ality

the def inition i s to be applied. Nor doe s logic provide a

n obvious gloss on the languag e that eliminates the a mbiguity
. Considering the ca se of r esidents, on the one ha nd, a ca se-by -ca se re solution m ake se nse as residenc y prog rams likely

vary in their nature . On the other hand, categ orica lly

resolvingthe
matte r i n f

avo r o f i ne lig ibi lity

might a lso make se ns e be c a us e a ll r e sid e nts have e arn e d th e ir medical de g ree s befor e commenc ing the ir reside ncies a nd all have patient car e re sponsibili ties that are su

bs tanti a l, t o s ay

the le a st. Mo re ov e r, a

c ate g or ic a l r e so lut ion

wo uld e ns ur e e qu ity amongresidents. As noted a bove, to qualify

for the stude nt exception, an individual mustwork for a "sc hool, colleg e, or unive rsity . . . ." 26 U .S.C. § 3121(b)(10). A c ase- by -ca se re solution might ther efor e g rant a

n exception to a resident who ha ppened to wor

k for a hospital that is part of a unive rsity

or medica l school but deny it to one who happene d to work for a standa lone hospital - despite the fa ct that the two programs we re similar in all other r eleva nt respec ts. A
c at e g o r i c a l r e s o l u t i o n , h o w e v e r , w o u l d tr e atth e me qu a l l y. Pol ic y c on sid e ratio ns a lso do n’ t f ur nis h a c le ar a ns we r. On

the on e ha

nd , a c a se -b y -c a se approa ch mig ht max imiz e fa irness in particula r situations. On the other ha nd, a categ orica l approa ch mig ht reduc e administrative c osts and provide c erta inty . See United States of A merica28

v. Mount Si nai Medica l Center of F lorida, 353 F . Supp. 2d 1217, 1229-30 (S.D. Fla. 2005) (a rguin gtha

t it wo uld be a wa ste of re so ur c e s to lit ig ate stu de nt e xce pti on c la ims by

re sid e nts be c a us e of the hu g e vo lum e of

c a se s and

the ir highly re pe tit ive fa c ts) , r e v' d, 48 6 F .3 d 1 24 8 ( 11 th Cir . 2 00 7) . G ive n th e pr e se nc e of pla us ibl e argume nts fo r d if

fe re nt i nte rp re tatio ns , th e te xt co uld
re a so na bly be int e rp re te d in

mor e tha n o ne fa sh ion . B e c a

us e of the ambi g uit

y of the ba re te xt,
re so rt to l e g isl ativ e his tor

y is p ro pe r t o d e te rm ine Con g re ss’ s inte nt. Coh e n v . JP Mo rg an Ch a se & Co., 498 F .3d 111, 116 (2d Cir. 2007). Her e, leg islative history

eliminates any

ambig uity

left by the bar e text, making it clea r be y on d a ny " re a so na ble do ub t" that Co ng re ss i nte nd e d th at r e sid e nts wo uld be su bje c t to F I CA taxation. C ohen, 498 F .3d at 122 (quotation omitted). B y "le g islative history ," I

do not mean
mere ly committee re ports and floor statements. As has ofte n been note d, these a re not a lway s an ide a l guid e to c on g re ssi on a l inte nt. Se e , e .g ., Wisc on sin Pub . Inte rv e no r v . M or

tie r, 50 1 U .S. 597, 620-22 (1991) (Scalia, J., concurr ing) . Rather, my view is based pr incipally on the contextual hist ory

of laws that Cong ress pa ssed re g ardingFI CA tax exemptions . This sequenc e of laws so c lear ly

reve aled Cong ress' s purpose that, for more than thre e dec ades a fter the 1965
ame ndme nt, a ll the re le va nt p art ie s a

pp e ar t o h ave un de rs too d th at r e sid e nts we re c ate g or ic a lly ineligible f

or the student exception. See Alba ny Medica l Center, 2007 WL119415, at *1 n.1. Stated more spec ifically , the leg islative history direc tly indicates that interns a

re subjec t to F I CAtaxati on

and the c ov e ra g e of

re sid e nts un de r t

he F I CAtax re g ime fo llo ws ine xora bly fr om t he c ov e ra g e of

int e rn s. In 1 93 9, Con g re ss p a sse d tw o r e le va nt e xemp tio ns to F I CA taxati on : th e or ig ina l ve rs ion of the stu de nt e xce pti on

and the int e rn

e xce pti on . So c ia l Se c ur ity Act Amendme nts of 1939, Pub. L . No. 76-379, c h. 666, 53 Stat. 1385 (1939). In the y ear s29

leadingup to 1964, a g rowingnumber of me dical re sidents claimed that they should be exempt from F I CA tax ation under the intern exception bec ause the functional distinctions betwee n interns and r esidents had e roded. The Six th Circuit rejec ted this argument, holding that a ny expansion of the intern exception was f or Cong ress, not the c ourts to cre ate. St. Luke' s Hosp. Assoc. v. United States, 333 F .2d 157, 164 (6th Cir. 1964). In 1965 - rather than e x pand the intern exception to cover

residents - Cong ress instead c hose to eliminate the intern e x ception entirely . Social Security

Act Amendme nts of 1965, Pub. L . No. 89-97 § 311, 79 Stat. 380-81 (1965). Th e Ho us e and

Se nate re po rt s, tho ug h n ot e sse nti a l to de te rm ini ngc on g re ssi on a l inte nt,
are nonetheless wor

th review ing. T he House Report for the 1965 amendment r epea ling the int e rn e xce pti on

ind ic ate d th at: Coverag e would also be extended to service s perf ormed by medical . . . inter

ns. The cover ag e of se rvice s as an inter n would g ive youngdoctors an e arlier start in building up social sec urity

protec tion and would help many of them to bec ome insured unde r the pr og ra m at a tim e wh e n th e y

ne e d th e fa

mil y surv ivo r a

nd dis a bil ity pr ote c tio n it provides. This protec tion is i mportant for doc tors of medicine who, like member s of other pr of e ssi on s, in t

he e arl y y e ars of the ir pr a c tic e , ma

y no t ot he rw ise have the me ans to provide a dequate survivorship and disability protec tion for themselves a nd their families Social Security

Amendments of 1965, H.R. Rep. No. 89- 213, 89th Cong. 1st Sess. 95, repr inted in 1965-2 C.B. 733, 735 (1965) . Simi larly , the Senate r eport for the bill repea ling the intern exception noted that " [c] overa g e would also be extended to service s perf ormed by medical

. . . inte rn s. " Soc ia l Se c ur ity Am e ndme nts of

19 65 , S. Re p. No . 8 9- 40 4 ( 19 65 ), re pr int e d in 1965-2 C.B. 758, 759 ( 1965). Take n toge ther, the c ontext ual history and leg islative purpose e stablish Congre ss's c lear int e nt t o c ov e r r e sid e nts un de r t he F I CAre g ime . Se e Al ba ny Me dic a l Ce nte r v . U nit e d St ate s,See the discussion in Albany Medica l Center, 2007 WL119415, at *3 n.2. 2 30 No. 1:04-CV-1399 (F J S/R FT) , 2007 WL119415, at *2-5 (N .D.N.Y. Jan. 10, 2007) (discussing the le g isl ativ e his tor

y of the stu de nt e xce pti on

so me wh at mo re fu lly

). Th e fa c t th at Co ng re ss passed both the inter

n exception and the student exception at the same time sugg ests that Congr ess did not intend interns to fall under the student exception. Moreover , the fa ct that Congr ess re peale d the exception for inter ns in 1965 indicates that Cong ress intende d for inter ns to b e su bje c t to F I CAtaxes. Th e re pe a l of the int e rn

e xce pti on

is s uf fi c ie nt o n it s o wn

to demonstrate this intent to secur e cove rag e and the House a nd Senate r eports indicatingthat interns ar e cove red a dds further confirmation. I f Cong ress intende d to include interns in the F I CA tax reg ime in 1965, that same intent
e xten ds to t

he c ov e ra g e of

re sid e nts . T he dis tin c tio n b e tw e e n inte rn s a nd re sid e nts wh ic h th e St. Luk e ' s o pin ion

fo un d b lur

re d in 19 64 ha s f

ur the r e ro de d s inc e the 19 65 ame ndme nt; but r e sid e nts
are at le a st a s f

ar r e mov e d f

ro m me dic a l sc ho ol a s th os e kn own a s inte rn s in 19 65
. Th e re fo re , if

2 i n t ern s ca t ego ri ca l l y

ar e n o tco v er ed , n ei th er

ar e r es i d en t s . At a m o re gen er al l ev el , C o n gre s s 's
o b j ec t i v e i nre p ea l i n g th e i n t ernex ce p t i o ni n1 9 6 5 i s cl ea r: t o s ec ure s o ci al i n s ura n ce co v er age for doc tors who ar e ea

rly in their ca

ree rs. The r epea l of the intern e x ception in 1965 ca nnot have meant any

thing e lse and the la

ng uag e of the House Repor t noting Cong ress' s objective to ensur e
cover ag e for

"youngdoctors" undersc ores this point. See Social Security Amendments of 1965, H.R. Rep. No. 89-213, 89th Cong . 1st Sess. 95, reprinted in 1965-2 C.B . 733, 735 (1965). Allowing r esidents to apply for the stude nt exception would thwart Congr ess' s clea r objec tive of
e ns ur ingtha

t youngdo c tor s r e c e ive the so c ia l in sura nc e c ov e ra g e fu

nd e d b y F I CA . Ind e e d, to ignor e this historical context is t o say that Congr ess eng ag ed in a f ruitless act whe n it repea ledThe c urre nt wave of litigation re g ardingresidents’ e x emption was appa rently touched of

f 3 by the Eig hth Circuit’s decision in Apfel. See Albany Medica l Center, 2007 WL119415, at *1 n.1. There is some controver sy over whether

Trea sury Regulations are a

naly zed under 4 Chevron def

ere nce or under the standard e lucidated by the Supreme Court in National Muffler Dea lers Ass' n, Inc. v. United States, 440 U.S. 472, 477 (1979) . See Swallows Holding , L td. v. Comm'r of

Interna l Revenue., 515 F .3d 162, 167 (3d Cir. 2008). The better vie w is that Trea sury Regulations are a

naly zed under Chevr on. See McN amee , 488 F.3d at 105 (applying Che vron); Cinema ' 84 v. Comm'r of Interna l Revenue., 294 F .3d 432, 439 (2002) ( applying Che vron); see also Swallows, 515 F.3d at 168 n.6 (discussing Mc Namee ). De spite this, the Second Circuit has 31 the e xemp tio ns fo r m e dic a l inte rn s in 19 65 , a lth ou g h n o o ne a

pp e ars to h ave tho ug ht s o unti l inventive lawyeringdiscovere d § 3121(b)( 10) some thirty y ear s later. 3 No r s ho uld

we be c on c e rn e d th at Co ng re ss' s inte nt m ig ht b e dif fe re nt t od ay

fr om what it was in 1965 in light of the evolvingdevelopment of resident pr og rams. This is a matter on which Cong ress should speak if it wishes to alter its previously stated and une quivocal g oal of pr ov idi ngc ov e ra g e fo r youngdo c tor s a nd the ir fa mil ie s. Mo re ov e r, in t

he se dif fi c ult tim e s, wh ile on e c an a

pp re c iate the fi na

nc ia l pr e ssu

re s h os pit a ls f

a c e and the ir de sir e to r e du c e c os ts, the re are su

bs tanti a l po lic y

iss ue s o f e qu ity

amon gre sid e nts and

be tw e e n a

nd amon gho sp ita ls that Congr ess is the body to consider be fore courts adopt a case -by -ca se appr oach a s urg ed by appellants he re. I

am awa re that other circ uit courts have r eac hed a dif fer ent conc lusion and Ido not take their de cisions lightly . Howeve r, Cong ress ha s spoken direc tly to the issue at hand. The majority

alternatively

relies on r egulations which the Tre asury Depa rtment issued reg ardingthe application of the student exception. This argument must be addre ssed under the under the fra

mework of

Chevron. See Mc Namee v. Dep' t. of the Tre asury , 488 F.3d 100, 105 (2d Cir. 2007) (a

pplying Che vron to a tre asury regulation and provisions of the Interna l Revenue Cod e ). Th e re su lt w ou ld b e the same . T he Che vr on fr ame wo rk

ha s tw o s te ps . " F ir st, a lw ay s, is 4expressed unce rtainty over the question of which standa rd g overns a s rec ently

as 2001. Ge nera l Elec. Co. v. Comm'r

of Interna l Revenue, 245 F .3d 149, 154 n.8 (2d Cir. 2001). More over, M cN am ee ci t es - b u td o es n o tap p l y - b o thNa t i o n al M u ff

l er an d C o t t age S av . As s 'nv . C o m m 'r of Interna l Revenue, 499 U .S. 554, 560 (1991), a tax case that relies on National Muffler. See McNamee, 488 F .3d at 106. I t is worth noting, howe ver, that the result would be the sa me whethe r Chevron or National Muff

ler is applied. National Muffler doe s not ex plicitly have the same two step structure as Chevron; rather National Muffler dic tates def ere nce when the r egulation "implement[s] the congressional manda te in some rea sonable manne r" and foc uses on a list of specific fac tors. National Muff ler, 440 U.S. 472, 476-77 ( 1979) (quotation omitted). Unsurprising ly , there fore , analy sis under National Muffler is a lso sensitive to legislative history
. See Allen Oil Co., Inc. v. Comm'r of Interna l Revenue, 614 F .2d 336, 339, 340-41 (2d Cir. 1980). In view of the clea r infer ence from the c hronolog y and purpose of the student exception, no regulation allowing r esidents to apply for the stude nt exception could stand under National Mu ff le r. Mo re ov e r, a s d isc us se d mo re fu lly be low , th e re le va

nt r e g ulatio n d oe s n ot e ve n c le arl y allow such a

pplications. See 26 C.F.R. § 31.3121(b) (10)- 2 (2003). 32 the question whethe r Cong ress ha s directly spoken to the pre cise que stion at issue. I f the intent
o f Co n g r e s s is c le ar , th at i s th e e n d o f th e matt e r

. . . . " Ch e v r o n , 4 6 7 U
. S. at 8 4 2
. Se c o n d , " [i ]f ... the cour

t determines Cong ress ha s not directly addre ssed the pre cise que stion at issue, .... the question for the c ourt is whether the ag ency' s answer

is based on a pe rmissible construction of the statute." I d. at 843. At step one of the Chevron fr amewor k, the cour

t must i nitially

focus on the la

ng uag e of the statute to deter

mine whether

Congr ess has dire ctly

spoken to the question at issue. Cohen, 498 F.3d at 116. A court may consider the context of the statute as a whole in deter mining wh e the r a g ive n p ro vis ion

is a mbi g uo us . F DAv. B ro wn & Willi amso n T ob a c c o Co rp ., 52 9 U .S. 120, 132-33 (2000) . I f the text of the statute is unambiguous w ith respec t to that issue, then the matter is settled. Cohen, 498 F .3d at 116. Should the tex t prove to be a mbiguous, the preponde ranc e of a

uthority indicates that leg islative history may be conside red at step one of the Che vr on fr ame wo rk

- b e fo re tur

nin gto t he re g ulatio ns . T he Se c on d Ci rc uit did pr e c ise ly thi s inIn Gen. Dy namics, the Court extensively considere d leg islative history befor e conc luding 5 that the Ag e Discr imination Empl oy ment Act cle arly

did not prohibit di scrimination in favor of older wor kers. 450 U.S. at 587- 90, 600. The Court held that, e ven if the a g ency ' s interpre tation would otherwise ha

ve bee n elig ible for de fer ence under Chevr on, the clar ity of the statute mea

nt that such def

ere nce did not apply . I d. at 600. In Br own & Wil liamson, the Court considere d whether the Food, D rugand Cosmetic Act ( “F DCA”) a llowed the F ood and Dr ugAdministration to regulate cig are ttes. At Chevron step one, the Court considere d acts pa ssed subsequent to the FDCA, pr oposed leg islation that was not passed and statements made by ag encie s, officia ls and leg islators at the time that rele vant leg islation was beingconsidere d. Br own & Wil liamson, 529 U. S. at 13 3- 57 . In s o d oin g , th e Court ble nd e d a

c on sid e ra

tio n o f t he statut or

y sc he me a s a

wh ole with a consider ation of leg islative history . See id. In L TV Corp., the Court consider ed leg islative history

at Chevron step one but found that it did not clearly indicate c ong ressional i n t e n t . L T V C o r

p . , 4 9 6 U
. S
. at6 4 9
- 5 0
. T o b e s ur e , th e S u p r e m e C o urth a s n o ta l w ays considere d leg islative history at Chevron step one - thoug h it does not appea r that the Court has ever expli citly

ruled out such c onsideration. See, e .g ., National Cable & Telec ommunications Ass' n v. Br and X Interne t Services, 545 U.S. 967, 986 (2005) ; National R.R. Passenge r Corp. v. Boston & Maine Corp., 503 U.S. 407, 417-18 ( 1992); but see K Ma rt Corp. v. Cartier, I

nc., 486 U.S. 281, 293 n.4 (1988) (opinion of Ke nnedy , J .) (wr iting only for himself a

nd J ustice Whit e a nd statin gthat, f

or purp os e s o f r e so lvi nga

statut or y te xtua l ambi g uit

y pr ior to t ur nin gto ag ency regulations, "a

ny ref ere nce to leg islative history , is in the first instance irr eleva nt.")
. The Sec ond Circuit considere d leg islative history at Chevron step one in Cohen. 498 F .3 d at 12 2- 24 . H ow e ve r, the re are so me Se c on d Ci rc uit c a se s p re datin gCoh e n whic h e xpre ss un c e rt a int y re g ard ingwh e the r l e g isl ativ e his tor y may be c on sid e re d at st e p o ne . Se e , e .g ., Sa sh v. Z enk, 428 F .3d 132, 137-38 (2d Cir. 2005); Coke v. L ongI sland Care At Home, Ltd., 376 F.3d 11 8, 12 7 & n. 3 ( 2d

Cir . 2 00 4) , r e v' d o n o the r gro un ds 12 7 S. Ct. 23 39 , 2 34 7- 49 (2 00 7) ; se e a lso United States v. Geiser , 527 F.3d 288, 292 ( 3d Cir. 2008) (holdingthat leg islative history may not be consider ed at Chevr on step one). N onetheless, in view of the Second Circuit' s rec ent decision in Cohen and the Supre me Court' s prac tice in Gen. D y namics, B rown & Wil liamson and L TV Corp., such c onsideration see ms proper in this case , particula rly beca use the leg islative 33 Cohen. I d. at 122-25. Indeed, the languag e of Chevr on implies an inquiry at step one that
re a c he s b e y on d th e ba

re te xt of the statut e . It de sc ri be s th e purp os e of ste p o ne a s b e ingto de te rm ine " the int e nt o f C on g re ss . . . ." Che vr on , 4 67 U. S. at 84 2 ( e mph a sis a dd e d) . It is there fore unsurprisingthat the Supreme Court ha s rec ently and fr equently

considere d leg islative history at step one of

Chevron. See G en. Dy

namics L and Sy s. v. Cline, 540 U.S. 581, 587-90, 600 (2004); B rown, 529 U.S. at 133, 147-48, 150, 154- 57; Pension Ben. Gua r. Corp. v. L TV Corp., 496 U.S. 633, 649-50 (1990). Acc ording ly , if, as I believe, the bare text is ambiguous 5history

clea rly establishes that Cong ress spoke the issue at hand f or the re asons discussed a bove. The sig nificant portions of the r eleva nt regulations are c losely

patterne d on the statutory 6 text . See 26 C.F.R. § 31.3121(b) (10)- 2 (2003). Though the re g ulation contains additional languag e, it does not resolve the issue pre sented he re. F or example, the re g ulation notes that "[t]he term ' school, colleg e, or unive rsity ' ... is to be taken in its commonly or g ener ally

acc epted sense." 26 C.F.R. § 31.3121(b)( 10)-2( d) (2003) . Thus, the re g ulation's la ng uag e adds little to the dis c us sio n. In a dd iti on

the re g ulatio n n ote s th at, t o d e te rm ine wh e the r a n in div idu a l is a

stu de nt, one must examine the "ba sis of the relationship of such employ ee w ith the [ school]" and that a n individual is considered a student when they

"pe rfor m[ ] services ... as a

n incident to and for

the purp os e of

purs uin ga

c ours e of stu dy
.. .. " 26 C.F .R. § 3 1. 31 21 (b )( 10 )- 2( c ) ( 20 03 ). Th e se e le me nts de fi nin gthe te rm " stu de nt" c ou ld a s e a sil y be a pp lie d o n a

c ate g or ic a l ba sis , a

pr og ramby -program ba sis or an individual basis. None of the se three interpre tations would be unrea sonable a

nd there fore the re g ulation does not resolve the ambig uity
. Ev e n if the re g ulatio n w e re c le ar, the his tor ic a l c on te xt dis c us se d a bo ve wo uld , in

my view, lea d to the same re sult. Given the clar ity of Cong ress' s intent, no regulation allowing residents to apply

for F I CA cover ag e would qualify as a pe rmissible interpretation of the statute. See Te x as v. United States, 497 F .3d 491, 506 (5th Cir. 2007) (finding , in the alternative, that even if a re g ulation could survive Chevron ste p one, it was unre asonable in light of c ong ressional intent). 34 and the leg islative history is conclusive, conside ration of the r eleva nt regulations is unnecessar y and step two of the Chevron fr amewor k is never r eac hed, cf

. Chevron, 467 U.S. at 842-43; Coh e n, 49 8 F .3 d at 11 6, a lth ou g h th e re g ulatio ns in e ff e c t at th e tim e wo uld

but ha ve a dd e d o nly
an o th e r l aye r o f amb i g u i ty. 6 For the fore g oing r easons, I

respe ctfully

concur in part and dissent in par t.