So for 2011 I was on OPT (F1 visa) - resident for tax purposes. No FICA taxes were withheld for 2011 and then in December my employer realized that was a mistake. They "Grossed-up" my income to the tune of the amount of FICA taxes and paid them on my behalf.

They sent me the W2 with the inflated net income. Now they want all the FICA they paid on my behalf back? Is this legal? I am not sure why I should be on the hook for both paying taxes on the FICA amount that my employer paid IRS on my behalf and also paying back what they paid the IRS on my behalf?

The way they did it was improper, but you need to look at the big picture here. If you complain to the IRS or Social Security Administratipon to get relief, they will find an excuse to fire you.

Talk to them about adjusting your W-2 BACK to the correct amount, and then negotiate a pay-back plan to pay them back over the next year or so.

You do, after all, have an ethical requirement to pay this tax.

You must pay FICA taxes in 2011. When you got your first pay check in 2011, it was your duty to inform your employer that you are resident for tax purposes.