University of Texas System Ex Rel. University of Texas Medical Foundation v. United States

Case: 13-50739 Document: 00512701002 Page: 1 Date Filed: 07/16/2014

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT United States Court of Appeals

Fifth Circuit

FILED

July 16, 2014

No. 13-50739

Lyle W. Cayce

Clerk

UNIVERSITY OF TEXAS SYSTEM, on behalf of The University of Texas

Medical Foundation, The University of Texas Health Science Center at Tyler,

The University of Texas M.D. Anderson Cancer Center and The University of

Texas Medical Branch at Galveston; UNIVERSITY OF TEXAS SYSTEM

MEDICAL FOUNDATION,

Plaintiffs - Appellants

UNIVERSITY OF TEXAS HEALTH SCIENCE CENTER AT SAN

ANTONIO,

Cross Defendant - Appellant

v.

UNITED STATES OF AMERICA,

Defendant - Appellee

Appeal from the United States District Court

for the Western District of Texas

Before WIENER, HAYNES, and GRAVES, Circuit Judges.

HAYNES, Circuit Judge:

The University of Texas System, on behalf of several of its subsidiary

medical institutions (collectively “UT”), sued the United States seeking refund

of the Social Security component of Federal Insurance Contributions Act taxes

it paid with respect to the service of medical residents in 2005. UT asserted

that the residents were exempt from Social Security taxes because they were

“students” under an agreement between the State of Texas and the

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No. 13-50739

Commissioner of Social Security. After the parties filed cross-motions for

summary judgment, the district court denied UT’s motion and granted

summary judgment for the United States, finding that the residents were not

students under the agreement. UT appealed. Because we conclude that UT’s

residents are not “students” within the meaning of the agreement between

Texas and the Commissioner of Social Security, we AFFIRM.

I. Statutory and Regulatory Background

“Through the Social Security Act and related legislation, Congress has

created a comprehensive national insurance system that provides benefits for

retired workers, disabled workers, unemployed workers, and their families.

Congress funds Social Security by taxing both employers and employees under

[the Federal Insurance Contributions Act (“FICA”)] on the wages employees

earn.” Mayo Found. for Med. Educ. & Research v. United States, 131 S. Ct.

704, 709 (2011) (citations omitted). When Congress adopted the Social

Security Act in 1935, it excluded service performed by state employees from

coverage due to questions about whether it could compel state participation.

Bowen v. Pub. Agencies Opposed to Soc. Sec. Entrapment, 477 U.S. 41, 44

(1986). In 1950, however, Congress enacted 42 U.S.C. § 418 (“Section 218” of

the Social Security Act), which allows states to voluntarily opt-in to the Social

Security system by entering into an agreement with the Commissioner of

Social Security. Id. at 44–45. Through a “§ 418 or § 218 agreement,” as it is

commonly called, a state may define to a certain extent which state employees

participate in Social Security. See id. at 45. The Internal Revenue Code’s state

employee exemption incorporates the various state § 418 agreements by

excluding from FICA taxation “service performed in the employ of a State”

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unless that service is “included under an agreement entered into pursuant to

section 218 of the Social Security Act.” 26 U.S.C. § 3121(b)(7)(E). 1

When opting in classes of employees through a § 418 agreement, states

may also employ exclusions in their agreement to ensure that specified subsets

of employees are not opted-in through the § 418 agreement. One of the optional

exclusions that a state may include within its § 418 agreement is for “service

performed by a student.” 42 U.S.C. § 418(c)(5). Section 418(c)(5) cross

references the general student exclusion applicable to private employers in

§ 410(a)(10), which is defined as applying to “[s]ervice performed 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 school, college, or

university.” See § 418(c)(5); Minnesota v. Apfel, 151 F.3d 742, 747 (8th Cir.

1998) (noting § 418(c)(5)’s cross reference to § 410(a)(10)).

In 1978, the Commissioner of Social Security issued a ruling addressing

Arizona’s contention that medical residents were not employees because,

among other arguments, “they were students whose services were excluded

from coverage under [Arizona’s] section 218 agreement.” See SSR 78-3, 1978

WL 14050 (1978). The Commissioner of Social Security found the medical

residents were not excluded from coverage under the student exclusion in

Arizona’s § 418 agreement, explaining that “[t]he Social Security

Administration has always held that resident physicians are not students.” Id.

In Apfel, the Eighth Circuit declined to defer to the Social Security

Administration’s (“SSA”) ruling because it found it to be inconsistent with the

Social Security regulation at 20 C.F.R. § 404.1028(c), which applies the general

1 Although not relevant to this appeal, this exemption does not apply to those

employees who are not participants in a state retirement system. See 26 U.S.C.

§ 3121(b)(7)(F). UT seeks refunds only with respect to medical residents who were members

of a Texas retirement system.

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student exclusion at 42 U.S.C. § 410(a)(10). See 151 F.3d at 748. In response

to Apfel, the SSA issued an “Acquiescence Ruling,” stating that “[u]nder SSA

rules, the services performed by medical residents do not qualify for the

student exclusion,” but that the SSA would apply Apfel’s case-by-case approach

in the Eighth Circuit. SSAR 98-5(8), 63 Fed. Reg. 58,444, 58,446 (Oct. 30,

1998).

II. Factual and Procedural Background

The State of Texas entered into a § 418 agreement in 1951. Texas’s

original § 418 agreement did not exclude service performed by a student. In

1998, Congress amended the Social Security Act to allow states to exclude

student services that were previously opted-in through a § 418 agreement. See

Act of October 21, 1998, Pub. L. No. 105-277, § 2023(a), 112 Stat. 2681.

Pursuant to that authorization, Texas amended its § 418 agreement in 1999 to

“exclude from coverage service performed after June 30, 2000, in the employ of

a school, college or university if such service is performed by a student who is

enrolled and regularly attending classes [there].” The modification applies to

“all student employees of the State of Texas,” including “student employees

of . . . The University of Texas System.”

According to UT’s amended complaint, its medical institutions operate

medical residency programs that provide training for doctors who have

completed medical school (“residents”). These residents “receive didactic

lessons (including ‘teaching rounds,’ lectures and procedural workshops) and

provide care for patients under the supervision of institution faculty,” regularly

working more than forty hours per week. Upon satisfactory completion of a

residency program and relevant board licensing examinations, residents

receive certification in their field of medicine from a national accreditation

body.

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At the time Texas’s § 418 agreement was modified to exclude students

from coverage, UT was withholding the employee portion of FICA taxes as to

its residents and paying the employer portion of FICA taxes as to its residents.

After the addition of the student exclusion to Texas’s § 418 agreement, UT

continued to treat the residents as covered by Social Security by withholding

and paying FICA taxes. UT did not seek administrative refunds regarding its

residents until April 2008.

In 2009, UT filed suit against the United States. Count two of UT’s

amended complaint sought a refund of Social Security FICA taxes paid as to

residents for the second, third, and fourth quarters of 2005 on the ground that

the residents were exempt under the student exclusion in Texas’s § 418

agreement. 2 The United States filed a crossclaim to recover an alleged

erroneous refund of FICA taxes regarding the University of Texas Health

Science Center San Antonio for the second, third, and fourth quarters of 2005.

UT moved for summary judgment on count two, seeking a declaration

that a case-by-case approach applied to the determination of whether its

residents were “students” for purposes of the student exclusion in Texas’s § 418

agreement. The United States filed a cross-motion for summary judgment on

its crossclaim and count two of UT’s amended complaint, requesting that the

district court find, as a matter of law, that the medical residents employed by

UT are not students for purposes of FICA taxes or the student exclusion in

Texas’s § 418 agreement. The district court denied UT’s motion and granted

the government’s motion, supporting its holding on three alternative grounds:

(1) Treasury regulations, which include a full-time employee rule, governed

such that the residents were not students; (2) even assuming Social Security

2 Counts one and three are not at issue in this appeal. Pursuant to the parties’ agreed

stipulation, the district court held count one in abeyance pending an administrative

resolution and dismissed count three with prejudice.

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regulations governed, the residents were not students in light of the SSA’s rule

that medical residents are not students; and (3) even under a contractual

approach, the residents were not students under Texas’s § 418 agreement. The

district court entered final judgment pursuant to Federal Rule of Civil

Procedure 54(b), denying relief on count two of UT’s amended complaint and

granting relief on the United States’ crossclaim. UT timely appealed.

III. Standard of Review

Summary judgment is appropriate when “there is no genuine dispute as

to any material fact and the movant is entitled to judgment as a matter of law.”

FED. R. CIV. P. 56(a). We review a grant of summary judgment de novo,

construing all facts and evidence in the light most favorable to the nonmovant.

See EEOC v. Chevron Phillips Chem. Co., 570 F.3d 606, 615 (5th Cir. 2009).

IV. Discussion

The parties’ arguments in this case track the district court’s three

alternative grounds for its holding. Consequently, as the third of their three

alternative arguments, both parties argue that even applying a contractual

analysis we should find in their favor. The parties do not explain why they

treat straightforward contractual interpretation as a fallback approach, nor do

they argue that this approach is a legally incorrect way to determine whether

resident service is included under Texas’s § 418 agreement. Because we hold

that a contractual analysis is the proper approach to the analysis in this

context and that under such an analysis UT’s medical residents do not fall

within the meaning of the term “student” as it is used in Texas’s § 418

agreement, we conclude that the district court’s grant of summary judgment

in favor of the United States was proper.

A. Contract Construction is the Proper Approach

The applicable statutory text, Texas’s § 418 agreement, and the case law

indicate that Texas’s § 418 agreement is contractual in nature. UT invokes the

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state employee exemption in the Internal Revenue Code to argue that its

residents are exempt from FICA taxes. See 26 U.S.C. § 3121(b)(7)(E).

According to the plain language of this exemption, service performed for a state

entity is not employment for purposes of FICA taxation unless that service is

“included under an agreement entered into pursuant to section 218 of the

Social Security Act [42 U.S.C. § 418].” Id. Likewise, 42 U.S.C. § 418 provides

that the term “employment,” for purposes of the Social Security Act,

encompasses “service included under” a state’s § 418 agreement. § 418(a)(2).

In other words, the scope of the state employee exemption, in both the Internal

Revenue Code and the Social Security Act, is necessarily determined by the

scope of each individual state’s § 418 agreement: the dispositive issue in

discerning the extent of coverage is whether the service at issue is “included

under” an agreement. This suggests that construction of the applicable § 418

agreement is the proper approach for deciding the extent of coverage.

Furthermore, § 418 does not simply speak of the state designating whether it

wishes to participate in the Social Security program. Rather, § 418 provides

that “[t]he Commissioner of Social Security shall . . . enter into an agreement

with [a] State,” which will include such provisions as the state may request.

§ 418(a)(1). The relevant statutory text thus indicates that these agreements

between the SSA and the several states are contractual in their ability to

govern the obligations of the states and the SSA under the Social Security Act

and Internal Revenue Code.

Additionally, Texas’s § 418 agreement appears to be a contract. It states

that the Social Security Administrator and the State of Texas “hereby

agree . . . to extend . . . the insurance system established by title II of the Social

Security Act” to the employees performing those services listed in the

agreement. It is signed by both the Commissioner of Social Security and the

Executive Director of the Texas Department of Public Welfare. It obligates the

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SSA to extend Social Security coverage to the services encompassed by the

agreement and obligates Texas to pay taxes on those services covered by the

agreement.

The Supreme Court’s opinion in Bowen, 477 U.S. 41, involving

California’s § 418 agreement, is instructive as well. California’s agreement

contained a provision, mirroring § 418(g), that allowed California to terminate

coverage previously opted-in through the agreement. Id. at 48–49. However,

Congress amended § 418(g) to prohibit states from terminating coverage under

an agreement. Id. at 48. California challenged the validity of the amendment,

arguing that it had a contractual right to terminate coverage and that the

amendment deprived it of this right without just compensation in violation of

the Fifth Amendment. Id. at 49. Faced with this argument, the district court

construed the § 418 agreement as a contract, held that it created a contractual

right to withdraw from the Social Security System, and held that the

amendment was unconstitutional under the Fifth Amendment. Id. at 50–51.

The Supreme Court reversed, but it did not do so on the basis that the

agreement was not a contract or should not be construed as a contract. Instead,

it held that Congress could modify the agreement since it reserved the right to

“alter, amend, or repeal any provision” of the Social Security Act and “the

Agreement expressly incorporated § 418, which of course was fully subject to

Congress’ reserved power of amendment.” Id. at 51–54 (citation and internal

quotation marks omitted). Seeming to assume that California’s § 418

agreement was a contract, the Court relied on the tenet that “contractual

arrangements, including those to which a sovereign itself is party, remain

subject to subsequent legislation by the sovereign.” Id. at 52 (citation and

internal quotation marks omitted); see generally id. at 52–54. The Supreme

Court criticized the district court for “heed[ing] none of [the] Court’s often-

repeated admonitions that contracts should be construed, if possible, to avoid

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foreclosing exercise of sovereign authority.” Id. at 52–53. The Court thus

indicated that § 418 agreements are contracts, which are generally subject to

subsequent legislation by Congress. 3

In the first of two alternative holdings in Apfel—the primary case urged

by UT—the Eighth Circuit likewise explained that “the Court in Bowen

actually assumed that [§ 418] agreements are contracts.” 151 F.3d at 746. 4

The Eighth Circuit held that Minnesota’s § 418 agreement was to be construed

as a contract and that the parties’ intent was controlling. See id. at 745–47

(agreeing with the district court’s holding that Minnesota’s § 418 agreement

“was a contract and that its terms must be interpreted by giving effect to the

intent of the parties”). There, the “uncontroverted evidence demonstrated that

when the parties executed the modification [to Minnesota’s § 418 agreement],

they did not intend to extend coverage [of the agreement to pay taxes] to the

medical residents.” Id. at 745. The Eighth Circuit’s primary holding was

therefore that Social Security coverage and associated tax withholding did not

3 The Court’s holding that Congress could nullify the termination provision of § 418

agreements does not undermine the idea that the agreements are contractual in nature vis-

à-vis the relationship between the states and the implementing federal agencies—a concept

that the United States seemed to admit in Bowen. See Brief for the Appellants, Bowen v.

Pub. Agencies Opposed to Soc. Sec. Entrapment, 477 U.S. 41 (1986) (No. 85-521), 1986 U.S.

S. Ct. Briefs LEXIS 298, at *31 (“Section 418 agreements have a ‘contractual aspect’ that may

not be repudiated by the Secretary . . . .”); id. at *20–21 (“Section 418 and the agreements

consummated under its authority describe the conditions that govern state participation in

the Social Security System; federal and state administrative officials must comply with those

conditions, as they must with all aspects of federal law.”).

4The Eighth Circuit explained:

Although Bowen holds that section 418 agreements are subject to modification

by Congress, it does not broadly dismiss such agreements as non-contractual.

To the contrary, the Court’s decision is replete with references to contractual

arrangements. Indeed, the backdrop against which the Court examined

California’s assertions was that contracts should be construed, if possible, to

avoid foreclosing exercise of sovereign authority. Thus, far from holding that

section 418 agreements are non-contractual, the Court in Bowen actually

assumed that such agreements are contracts.

151 F.3d at 746 (citation and internal quotation marks omitted).

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extend to residents of the University of Minnesota given the parties’ mutual

intent to that effect. See id. at 747.

In light of these indications that a § 418 agreement is to be construed as

a contract between a state and a federal agency, we find it proper to take the

approach employed in the primary holding in Apfel. We therefore use contract

principles to construe the student exclusion in Texas’s § 418 agreement. 5

B. Applying Contract Principles to Texas’s § 418 Agreement

“[O]bligations to and rights of the United States under its contracts are

governed exclusively by federal law.” Boyle v. United Techs. Corp., 487 U.S.

500, 504 (1988); see also United States v. Seckinger, 397 U.S. 203, 209–10

(1970). Applying federal law in the contract context includes looking to

“principles of general contract law” that can be found in treatises or

restatements of the law. Franconia Assocs. v. United States, 536 U.S. 129,

141–42 (2002) (citation and internal quotation marks omitted); see also Mobil

Oil Exploration & Producing Se. v. United States, 530 U.S. 604, 607–08 (2000);

Seckinger, 397 U.S. at 210.

The overarching consideration in interpreting an agreement is to give

effect to the principle purpose of the agreement as understood in light of the

agreement as a whole and all the circumstances. See RESTATEMENT (SECOND)

OF CONTRACTS § 202(1)–(2) (1981); see also Apfel, 151 F.3d at 745–47 (holding

5 A further reason for employing a contractual approach is that both the Social

Security regulation that UT argues governs and the Treasury regulation that the United

States argues governs indicate that they are inapplicable to service covered by a § 418

agreement. See 20 C.F.R. § 404.1028(a) (“For purposes of this section, a school, college, or

university . . . . does not . . . include any school, college, or university that is an

instrumentality or integral part of a State or a political subdivision of a State for which work

can only be covered by an agreement under section 218 of the Act.”); 26 C.F.R.

§ 31.3121(b)(10)-2(a)(2)(iii) (stating that it “shall not apply to services performed in the

employ of a school, college, or university of a State or a political subdivision thereof by a

student referred to in section 218(c)(5) of the Social Security Act (42 U.S.C. 418(c)(5)) if such

services are covered under the agreement between the Commissioner of Social Security and

such State entered into pursuant to section 218 of such Act”).

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that a § 418 agreement “must be interpreted by giving effect to the intent of

the parties”). The student exclusion in Texas’s § 418 agreement mirrors that

at 42 U.S.C. § 410(a)(10), thereby indicating that the parties intended to

incorporate the Social Security Act’s general student exclusion. 6 This

understanding by itself, however, does not resolve whether the parties

intended for the student exclusion in Texas’s § 418 agreement to apply to

residents, since § 410(a)(10) does not actually define the term “student” or

answer whether medical residents are students. Cf. Mayo, 131 S. Ct. at 711

(holding that the almost identical language at 26 U.S.C. § 3121(b)(10) “does

not define the term ‘student,’ and does not otherwise attend to the precise

question whether medical residents are subject to FICA”). 7 The scope of the

term “student” must be considered within the context of the specific agreement

or statute before the court. See id. at 715–16 (“We do not doubt that . . .

residents are engaged in a valuable educational pursuit or that they are

students of their craft. The question whether they are ‘students’ for purposes

of § 3121, however, is a different matter.”). Here, any initial uncertainty as to

6 The agreement also states that its terms are in conformity with § 418, and, as

explained supra, § 418(c)(5) cross-references the general student exclusion in § 410(a)(10).

7 We need not embrace the district court’s approach of concluding that medical

residents are not “students” in general. On this point, UT rightfully argues that the term

“student” can encompass medical residents; indeed, we have described residents as

“students” in other legal contexts. E.g., Shaboon v. Duncan, 252 F.3d 722, 729–33 (5th Cir.

2001). Nevertheless, as the United States points out, that medical residents have been

considered “students” in some legal contexts does not compel an identical result in this case

where the issue is the meaning of the term within Texas’s § 418 agreement. In fact, the

Supreme Court has found it reasonable to conclude that medical residents are not “students”

in the closely analogous context of the general student exclusion in the Internal Revenue

Code. See Mayo, 131 S. Ct. at 715 (holding that it is not irrational to conclude “that these

doctors—who work long hours, serve as highly skilled professionals, and typically share some

or all of the terms of employment of career employees—are the kind of workers that Congress

intended to both contribute to and benefit from the Social Security system” (citation and

internal quotation marks omitted)). The parties’ arguments simply underscore the fact that

the term “student,” devoid of any other context, does not unambiguously encompass or

exclude medical residents. See id. at 711.

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whether UT’s medical residents are students within the meaning of Texas’s

§ 418 agreement is resolved through further application of general principles

of contract law.

At the time when the student exclusion was added to Texas’s § 418

agreement in 1999, the SSA clearly disclosed its understanding that medical

residents did not fall within the meaning of the term “student” as that term is

used in the student exclusion that states could incorporate into their § 418

agreements. A 1978 Social Security Ruling explained that the SSA “has always

held that resident physicians are not students.” SSR 78-3, 1978 WL 14050

(1978). In 1998, the SSA unsuccessfully advocated in favor of this meaning in

Apfel, 151 F.3d at 748. Shortly after the decision in Apfel, the SSA reaffirmed

its understanding that “[u]nder SSA rules, the services performed by medical

residents do not qualify for the student exclusion.” SSAR 98-5(8), 63 Fed. Reg.

58,444, 58,446 (Oct. 30, 1998). The SSA also made clear that it would employ

the case-by-case approach used in Apfel only in regard to “Federal-State

agreements for coverage and subsequent modifications under section 218 of the

Act involving Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota

or South Dakota.” Id. This all occurred prior to Texas adding the student

exclusion to its § 418 agreement.

UT does not point to any evidence that Texas understood the student

exclusion to carry a different meaning than that held by the SSA at the time

the agreement was amended. More decisively, to the extent that Texas defined

the student exclusion differently from the SSA’s well-disclosed meaning, there

was no reason for the SSA to know this as Texas did not disclose any such

contrary meaning. In this circumstance, it is hornbook contract law that the

well-disclosed meaning of the SSA governs as opposed to any undisclosed

meaning that Texas might have held. See United States v. Stuart, 489 U.S.

353, 367 n.7 (1989) (“It is hornbook contract law that the proper construction

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of an agreement is that given by one of the parties when ‘that party had no

reason to know of any different meaning attached by the other, and the other

had reason to know the meaning attached by the first party.’” (quoting

RESTATEMENT (SECOND) OF CONTRACTS § 201(2)(b))); see also 5 MARGARET N.

KIFFIN, CORBIN ON CONTRACTS § 24.5 (Joseph M. Perillo, ed. 2014). 8

The parties’ course of performance likewise indicates that UT’s medical

residents do not fall within the student exclusion in Texas’s § 418 agreement.

“[G]reat weight” should be given to the fact that UT repeatedly paid and

withheld FICA taxes on its residents after the student exclusion was added to

Texas’s § 418 agreement in 1999. RESTATEMENT (SECOND) OF CONTRACTS

§ 202(4) (“Where an agreement involves repeated occasions for performance by

either party with knowledge of the nature of the performance and opportunity

for objection to it by the other, any course of performance accepted or

acquiesced in without objection is given great weight in the interpretation of

the agreement.”); see also 5 MARGARET N. KIFFIN, CORBIN ON CONTRACTS

§ 24.16. It was not until 2008 that UT objected to this performance under the

agreement by filing an administrative claim for a refund with the IRS. This

course of performance is thus strong evidence that the parties did not intend

for the student exclusion in Texas’s § 418 agreement to apply to UT’s medical

residents. Significantly, the inverse course of performance occurred in Apfel:

the University of Minnesota “had consistently treated the residents’ stipends

as excluded from coverage for more than thirty years.” 151 F.3d at 745 n.7.

The Eighth Circuit thus listed this factor as among the uncontroverted

evidence that the parties’ intended for the medical residents to be excluded

from coverage. Id. at 745 & n.7.

8 Notably, this contract construction principle could not be applied in the same

manner in Apfel. There, the student exclusion was added to Minnesota’s § 418 agreement in

1958, with SSR 78-3 not being issued until 1978. See Apfel, 151 F.3d at 744.

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In sum, the well-disclosed meaning given to the term “student” by the

SSA is confirmed by approximately eight years of conforming performance by

UT and is not contradicted by a contrary meaning disclosed by Texas at the

time of the agreement. These consistent manifestations of the parties’ mutual

intent compel the conclusion that UT’s medical residents are not students

within the meaning of the student exclusion in Texas’s § 418 agreement (and

we limit our holding to this particular context only). 9 See RESTATEMENT

(SECOND) OF CONTRACTS § 202(5) (“Wherever reasonable, the manifestations

of intention of the parties to a promise or agreement are interpreted as

consistent with each other and with any relevant course of performance, course

of dealing, or usage of trade.”). To borrow the language of the Supreme Court,

“[w]e do not doubt that [UT’s] residents are engaged in a valuable educational

pursuit or that they are students of their craft. The question whether they are

‘students’ for purposes of [Texas’s § 418 agreement], however, is a different

matter.” Mayo, 131 S. Ct. at 715–16. As the Eighth Circuit concluded in its

primary holding in Apfel, we hold that the parties’ intent on this issue at the

time they modified the agreement is controlling. See Apfel, 151 F.3d at 747. 10

Accordingly, summary judgment in favor of the United States was proper

because UT’s residents are not students within the meaning of the student

exclusion in Texas’s § 418 agreement.

AFFIRMED.

9 We do not address whether the services of other employees are included under

Texas’s § 418 agreement or whether medical residents are “students” in other legal contexts.

10 Because we hold that contractual analysis is the proper approach and that under

such an analysis UT’s residents do not fall within the meaning of the term “student” as it is

used in Texas’s § 418 agreement, we do not go on to consider the applicability of 20 C.F.R.

§ 404.1028 as the Eighth Circuit did in its alternative holding in Apfel. See 151 F.3d at 747–

48. For the same reason, we do not address 26 C.F.R. § 31.3121(b)(10)-2 as the United States

requests. See also supra note 5 (explaining that both regulations indicate that they are

inapplicable to service covered by a § 418 agreement).

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