Feds to pay $500M in Social Security suit

August 11, 2009 3:30:31 PM PDT
A federal judge has tentatively approved a settlement requiring the government to pay more than $500 million to tens of thousands of people wrongly barred from receiving Social Security payments.

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The Social Security Administration over the last several years withheld benefit checks from recipients found to have outstanding arrest warrants.

Agency officials saying they were complying with a 1996 law requiring them to stop payments to recipients "fleeing to avoid prosecution" of a felony.

But a class action lawsuit filed last year alleged the policy was wrongly applied to all recipients with warrants, whether they were fleeing prosecution or not.

In reaching the settlement, the agency agreed to pay missed benefits and reinstate monthly payments to at least 80,000 people.

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