The Social Security Administration has agreed to pay more than $500 million in benefits that had been withheld from 80,000 people since January 2007 and to eliminate overpayment balances for tens of thousands of others. The decision is the result of a class action lawsuit against the agency that boiled down to a poorly implemented database system.

The government is permitted by law to withhold benefits to fugitive felons, but the Social Security Administration had put into place an automated system that withheld payments and suspended benefits of anyone whose name matched those in a number of databases of outstanding warrants. That meant that just about anyone with an outstanding arrest warrant was denied benefits, including people who were unaware of warrants, were falsely accused or whose crimes were unproven, or had long-dormant warrants or minor infractions.

Many of the plaintiffs in the suit "never knew that criminal charges were pending against them, let alone that a warrant had been issued," said Gerald McIntyre, an attorney with the National Senior Citizens Law Center, in a statement. In one case, the SSA cut benefits to California resident Rosa Martinez because of a 28-year-old drug warrant in Miami. In fact, Martinez had never been to Miami or used drugs.

The case, Martinez et al v. Astrue, began last October. The settlement approved Tuesday by U.S. District Court judge Claudia Wilken is preliminary and should be finalized next month.

Although there's room for appeal, the SSA stopped denying benefits in most cases of outstanding warrants at the beginning of April. At the time, it said it would provide back benefits and reinstatements to those who had been denied benefits due to outstanding warrants.

The situation wasn't the result of a technical glitch. Going forward, the SSA will use human intermediaries to ensure that matches are actually fugitive felons rather than relying entirely on the automated data-matching system, according to a spokeswoman at Munger, Tolles & Olson, one of the law firms involved in the case.

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