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Judge OKs $500 Million Settlement by Social Security Administration
The Recorder
August 13, 2009
The Social Security Administration has agreed to pay an estimated $500 million to people whose benefits it suspended or denied between January 2007 and April of this year, under a settlement given preliminary approval by a judge Tuesday.
The government also agreed to change the policy under which it denies or suspends payments for people with outstanding arrest warrants. People whose benefits were denied or suspended between 2000 and 2006 also will have a chance to reinstate their benefits.
"It was an opportunity to help an enormous number of people per month," said David Fry, a litigation partner at Munger, Tolles & Olson, which represented the plaintiffs. A number of plaintiffs firms worked on the litigation, filed last October. "We tried to move fast in the case," Fry said.
The Social Security Administration did not admit liability as part of the settlement, which went before U.S. District Judge Claudia Wilken on Tuesday.
The proposed nationwide class -- the lawyers asked for certification hand-in-hand with the settlement Tuesday -- involves about 200,000 people, including 80,000 whose benefits had been suspended or denied since January 2007, according to an estimate by the plaintiffs attorneys.
The settlement agreement calls for $483,000 in attorneys fees to be awarded in addition to the settlement amount, divided among five firms: National Senior Citizens Law Center will get $225,000; Munger, Tolles, $141,000; Urban Justice Center, $70,000; Disability Rights California, $35,000; and Legal Aid Society of San Mateo County, $12,000.
The lawsuit revolves around the Social Security Administration's policy for suspending or denying benefits for people with outstanding felony warrants. The plaintiffs argued the policy went beyond a provision in the Social Security Act that's meant to prevent people from using Social Security money to flee prosecution. One plaintiff allegedly bounced a check in Texas and was unaware of his outstanding warrant until his disability benefits were cut off, for example.
Plaintiffs also argued that the government's use of a computer system that matched names in warrant databases to those at the Social Security Administration led to people without any outstanding warrants being denied their benefits.
Plaintiff Rosa Martinez, for example, sought help from Legal Aid Society of San Mateo after her benefits were cut off due to an outstanding warrant for another woman with the same name.
The settlement notes that the Social Security Administration has narrowed the policy, as of last April, to warrants issued on charges such as flight or escape.
The plaintiff firms said the Social Security Administration had litigated the key issue in the case -- the interpretation of the statute dealing with government benefits to those fleeing arrest -- in individual cases and lost eight times. "I think they wanted to settle before getting a ruling that would be adverse," Fry said. "The prospect of having to act on a schedule imposed by the court was rather daunting for them."
The U.S. attorney's office for the Northern District declined to comment on the case on Monday, and Assistant U.S. Attorney Victoria Carradero, who appeared in court Tuesday, did not return a phone call after the hearing.
Magistrate Judge Edward Chen mediated the settlement agreement. "He was extremely helpful in bridging the distance between both parties," Fry said.
A fairness hearing is set for Sept. 24.
