A group of former psychiatric medical residents who worked at Advocate Lutheran General Hospital have brought a potential class action lawsuit against the hospital and the operator of Illinois’ largest health system, contending Advocate has wrongly withheld federal tax refunds they were due from their time working at Lutheran General in the late 1990s and early 2000s.
On March 17, 18 former Advocate resident doctors filed a complaint in Cook County Circuit Court against Downers Grove-based Advocate Health and ALGH in Park Ridge, alleging Advocate has held on to special FICA tax refunds Advocate had allegedly collected from the federal government on behalf of perhaps as many as 40 doctors who completed their residency at Advocate facilities.
Plaintiffs identified in the complaint included: Dr. Michael Wagner, who served as a psychiatry medical resident at ALGH from 1997-2001; Dr. Michelle Flowers, a resident at ALGH from 2001-2004; Dr. Peter Lourgos, from 1999-2003; Dr. Sandip Buch, from 2002-2006; Dr. John Ciaccio, from 1998-2002; Dr. Erich DeCastro, from 1995-1999; Dr. Denise Johnson-Dechow, from 1994-1998; Dr. Nabil Guirguis, from 2000-2004; Dr. Zulima Hurtado, from 1993-1996; Dr. Ali Ibrahim, from 2000-2004; Dr. Allen Kuo, from 1997-2001; Dr. Geoffrey Levin, from 2003-2005; Dr. Helena Muirragui, from 1996-2000; Dr. Janeen Paul, from 1999-2003; Dr. Monica Salvador-King, from 1994-1999; Dr. Yuri Shvartsman, from 1994-1998; Dr. Wendy Yim, from 2004-2008; and Dr. Adrienne Yourek, from 2003-2005.
The complaint centered on the collection of FICA tax refunds paid by the federal government to medical institutions which employed resident doctors from 1995-2005 to resolve a years-long dispute between tax collectors and hospitals over the proper classification of medical residents for tax purposes.
Advocate, like other hospital operators, has continuously withheld FICA taxes from medical residents’ paychecks, the complaint said. However, from 1995-2005, Advocate and others began arguing residents were medical students, and not employees, meaning they should not be subjected to FICA taxes. Advocate and other hospital operators then began filing so-called “protective” requests for refunds of the amount of FICA taxes paid by the hospitals and the residents. The requests were designed to essentially preserve the rights of the residents to the refunds, should the Internal Revenue Service come to agree with the hospitals’ position.
In 2005, the IRS ruled anyone who works more than 40 hours a week for a college or university – or, in this case, a teaching hospital – cannot be considered a student for purposes of FICA taxes, and must pay.
The IRS, however, altered its position slightly in 2010, allowing anyone who had submitted FICA refund claims under the student exception before 2005 to collect their refunds.
The IRS then refunded those taxes with interest to the institutions that had submitted them, the complaint said, and those institutions were supposed to give the residents their share of the tax refunds.
However, to date, Advocate has not paid the ALGH psychiatric residents the portion of the refunds that should have been theirs, the complaint alleged.
The plaintiffs have asked the court to certify the class of all psychiatric resident doctors who worked at ALGH from 1995-2005; order Advocate to pay the doctors the tax refunds they allege they are owed; and award unspecified punitive damages, plus attorney fees.
The plaintiffs are represented in the action by attorneys with the firm of Stephan Zouras LLP, of Chicago.