Rosa Martinez was stunned the Social Security Administration suspended her monthly benefits in December 2008. Her shock turned to disbelief when she learned that an outstanding 1980 warrant for a drug charge in Miami was the reason. The disabled 53-year-old from Redwood City, Calif., had never set foot in South Florida or been involved with drugs.

“It was devastating. That was my only source of income,” Martinez said. “The Social Security Administration should be more careful and investigate first before they take people’s benefits away.”

Martinez was lucky. Her benefits were restored relatively quickly when a team of lawyers filed suit after establishing that the warrant was for a different Rosa Martinez who had the same birthday. Thousands of others have been wrongly denied benefits or incorrectly had their benefits suspended because of mistaken identity or because they were incorrectly identified by the Social Security Administration as fugitives from the law.

Those problems are far less likely to occur now because of an aggressive legal push by a coalition of senior citizens’ rights lawyers and a small team of pro bono attorneys led by Munger, Tolles & Olson partner David Fry. The coalition filed a class action against the Social Security Administration in late 2008 on behalf of about 200,000 people like Martinez who had been wrongly denied their benefits. Within less than a year, they secured a settlement that overhauled the way the agency checks beneficiaries for outstanding warrants. As part of the settlement, the government agreed to pay back an estimated $500 million to those who incorrectly had been denied their benefits.

“These are some of the most vulnerable people in our society,” Fry said. “They are either elderly or disabled. They have basically no resources. When you cut off their benefits, you are basically sending them out into the streets. It was shocking that the Social Security Administration could be so callous about these vulnerable people.”

The root of the problem was a policy that fugitives from the law are not eligible for government benefits. Instead of denying benefits to those actively fleeing authorities, the agency considered anyone with an outstanding felony warrant to be a fugitive and thus ineligible for benefits. That meant people with long-dormant warrants, warrants for minor infractions or warrants they never knew existed saw their Social Security benefits denied or suspended with little recourse. It led to cases of mistaken identity, as happened to Martinez, because the agency relied on a computer database to match beneficiary names and warrants.

Roberta Dobbs found herself swept up in a complicated and baffling dispute with the Social Security Administration when the agency suspended her widow’s benefits in January 2006. Dobbs was told that she had an outstanding warrant from a 2001 traffic accident in California. Dobbs, who is 76 and now lives in Durant, Okla., was indeed in the accident but had no idea a warrant had been issued.

She said that Social Security workers were unsympathetic and informed her that she would have to fix the problem with the district attorney in California. Without her benefits, she struggled to make ends meet and depended on help from family and friends. Her serious health problems made her situation increasingly dire.

‘I FELT LIKE I WASN’T A GOOD PERSON’

“They denied me any help at all. I felt like I wasn’t a good person, but I hadn’t done anything wrong,” Dobbs said. “I became extremely depressed.”

A local legal aid attorney referred Dobbs to Gerald McIntyre, directing attorney with the National Senior Citizens Law Center, who was looking for lead plaintiffs for a class action challenging the Social Security Administration’s fugitive policy. In addition to plaintiffs, McIntyre needed pro bono help on the procedural side of the action. He approached several partners at Munger, Tolles & Olson in August 2008, and Fry — a partner in the San Francisco office who handles a lot of shareholder class actions — quickly signed on to help. He was shocked by the stories of the Social Security Administration’s failings.

“How can you have a system that cuts people off when it’s blatantly obvious that they aren’t the right people?” he said.

Fry had previously done pro bono work on gun control, prisoners’ rights and homeless rights but had never been involved in a pro bono class action. He assembled a small team with associates Mark R. Conrad and Jeremy Kroger, who has since left the firm.

Altogether, the law firm team spent about 1,200 hours and $8,200 for incidentals on the matter.

“They had a real interest and commitment to this issue,” said McIntyre, who headed the legal effort along with Fry. “We felt we needed this help because were just a small nonprofit and we’re not equipped to handle a case like this. It was clear that this matter was every bit as important as any other case they were handling.”

The legal team filed a complaint in the U.S. District Court for the Northern District of California in October 2008, with Rosa Martinez as the plaintiff. They realized they had to move quickly because the Social Security Administration almost immediately reinstated Martinez’s benefits in what Fry suspects was an effort to moot the lawsuit.

Assistant U.S. Attorney Victoria Car­radero, who represented the Social Sec­urity Administration, declined through a spokesman to comment.

The plaintiffs’ team scrambled to find five more name plaintiffs and filed an amended complaint in December that asked for class status, requested that the Social Security Administration’s policy be found unconstitutional and asked for a preliminary injunction reinstating benefits for a portion of the class.

‘THEY WERE GOING TO LOSE’

The two sides went into mediation in March but failed to reach an agreement. Just before they were due in court to argue motions, the two sides reached a settlement in principle. It came just about six months after the plaintiffs filed their initial complaint.

“They wanted to settle rather than have a hearing because they were quite concerned that they were going to lose,” Fry said.

Under the settlement, the Social Secu­rity Administration agreed to suspend benefits only for people with warrants specifically for fleeing or escaping authorities. The agency agreed to make retro­active payments for the estimated 80,000 people whose benefits were wrongly stopped beginning in 2007. Those whose benefits were incorrectly stopped before 2007 will receive a letter from the Social Security Administration inviting them to reapply for benefits. The agency will stop trying to collect so-called overpayments — meaning money that people received when they were supposedly ineligible.

Letters from the Social Security Administration will start going out during the coming weeks and months informing beneficiaries of these changes. Most people will have no idea of the legal effort behind the new policies. That’s quite all right with Fry, who said his pro bono work isn’t about recognition but about making sure the government fulfills its obligations.

But Dobbs and Martinez said they are grateful that the team of lawyers stepped in when no one else would.

“They’ve been such a great help to me,” Martinez said.

Karen Sloan can be contacted at ksloan@-alm.com.