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Bloomberg.com

August 12, 2009

U.S. Social Security Agency settles benefit lawsuit

Update 1

By John Hughes

Aug. 12 (Bloomberg) -- The U.S. Social Security Administration agreed to pay a total of $500 million to 80,000 people whose benefits were wrongly withheld by a federal program intended to deny payments to those fleeing arrest, the National Senior Citizens Law Center said.

The agreement was part of a class-action settlement given initial approval yesterday by U.S. District Judge Claudia Wilken in Oakland, California, the center said in a statement.

The Social Security Administration used a computer system matching arrest-warrant names with agency data to deny benefits, according to the law center statement. The agency was attempting to carry out a law that seeks to prevent people from using government benefits to avoid arrest, the group said.

Many matches involved false or unproven allegations, minor infractions or dormant warrants, said the legal group, which represented plaintiffs who filed a lawsuit.

“Many never knew that criminal charges were pending against them, let alone that a warrant had been issued,” Gerald McIntyre, attorney with the center, said in the statement.

Under the agreement, the agency stopped denying benefits as of April 1 due to warrants, unless they were issued in a criminal proceeding or on a charge involving attempts at flight or escape, the group said.

The Social Security Administration can’t comment because the settlement approval was preliminary and is not yet final, said Dan Moraski, a spokesman for the agency.

To contact the reporter responsible for this story: John Hughes in Washington at jhughes5@bloomberg.net

Last Updated: August 12, 2009 15:33 EDT