Supreme Court Rules In Bankruptcy Case

Supreme Court Justice Elena Kagan has delivered her first majority opinion, siding with a credit card company in a bankruptcy case.

The dispute involved the 2005 bankruptcy law enacted by Congress to ensure that people who file for bankruptcy pay part of their debt if they can afford it. The lower courts have disagreed on how to calculate a debtor's disposable income under the standardized methods specified in the law.

In the case before the court, a Nevada man named Jason Ransom, in filling out the forms, claimed the standard $471 monthly car payment — though he owned his car free and clear. The credit card company objected, noting that with the car repayment deduction, Ransom had just $210 per month in disposable income that could be used to repay his debt over five years, versus $681 in disposable income each month without the deduction.

By an 8-to-1 vote, the court agreed with the credit card company. Writing for the majority, Justice Kagan said that since Ransom had no actual monthly car payments, he could not claim the standard transportation ownership costs to defray his debt repayment. She noted that he was entitled to the standard vehicle operation costs.

Justice Antonin Scalia was the lone dissenter. He contended that Congress understood there would be occasional peculiarities when it chose to adopt a standardized system instead of a case-by-case analysis of each debtor.

Ruling On Medical Residents

In a second opinion delivered by the court Tuesday, the justices ruled unanimously that medical residents — doctors in training — are workers subject to Social Security taxes.

Residents work 50-80 hours a week under the supervision of attending physicians at hospitals across the country. The hospitals contend that the residents are students, learning through hands-on training, and that since the Social Security law exempts students from paying Social Security taxes, residents are exempt. In short, that they are students who work, not workers who are students.

The Treasury Department, however, disagreed. It issued a regulation that said anyone who works more than 40 hours at a hospital is subject to the tax.

Writing for a unanimous court, Chief Justice John Roberts said that while many might disagree with the department's regulation, it is nonetheless a reasonable interpretation of the law, and that the court must thus defer to it. Congress, he observed, can change the law if it wishes.

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