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Court Restores Social Security Benefits for Thousands; Victims May Recover $1 Billion in Benefits

April 17, 2012 (New York) – As many as 140,000 Americans nationwide will get their Social Security or Supplemental Security Income (SSI) benefits restored as a result of an order issued by Judge Sidney H. Stein in a federal court in Manhattan on April 13, 2012. The benefits in question date back to October 2006 and may total $1 billion.

The order is the culmination of more than five years of litigation in Clark v. Astrue – Docket No. 06-15521 (S.D.N.Y.) – a case brought against the U.S. Social Security Administration (SSA) challenging its practice of relying exclusively on outstanding probation and parole warrants as sufficient evidence that individuals are in fact violating a condition of probation or parole as a basis for denying them benefits. Rather than check the facts of a case, SSA merely matched warrant databases against its records. When it found a probation or parole warrant in the name of someone who was receiving benefits, SSA checked with law enforcement and, if the law enforcement agency was not actively pursuing the individual, SSA would cut off that individual’s benefits. In March 2010, the U.S. Court of Appeals for the Second Circuit ruled that the agency’s practice of relying solely on outstanding probation or parole violation arrest warrants to suspend or deny benefits conflicted with the plain meaning of the Social Security Act. Under Judge Stein's order, the SSA is enjoined from denying or suspending benefits in this manner and must reinstate all previously suspended benefits retroactive to the date the benefits were suspended. The SSA has until June 12, 2012, to submit a plan setting forth its anticipated time frames for implementing the terms of the order.

The unlawful policy caused widespread suffering while it was in effect. Elaine Clark, one of the lead plaintiffs, had her benefits stopped in the beginning of 2006 because of a warrant from Santa Clara County, CA, where she had been sentenced to probation and ordered to pay restitution as a result of an embezzlement charge. During that time, she was diagnosed with end-stage renal disease on top of other ailments and was no longer able to work. Unable to get a kidney transplant in California, she returned to her hometown of Buffalo, NY, when she learned the waiting time there would be far less. Although she obtained the transplant, she was still in need of extensive medical care and unable to work. Her modest Social Security benefit was barely enough to pay the rent at the long-term care facility and not sufficient to pay the required restitution. Ms. Clark died in 2008 at the age of 65. All the while, law enforcement officials in California knew where she was and knew of her condition, and had no interest in pursuing her.

“As a result of the Court’s order, SSA can no longer use this misguided policy to consign others to spend their final days in the type of misery endured by Elaine Clark,” said Gerald A. McIntyre, directing attorney at the National Senior Citizens Law Center. “It was the very purpose of the Social Security Act to spare older Americans from such a fate.”

“The aged and disabled individuals victimized by the Social Security Administration’s unlawful practice have suffered greatly, with many facing eviction, dire poverty or worse,” said Jennifer J. Parish, attorney at the Urban Justice Center’s Mental Health Project. “Cutting off someone’s income should not be taken so lightly, and we are gratified that the Court has ordered that the SSA restore benefits to those who were illegally denied them.”

“The victims of the Social Security Administration’s policy are among the most vulnerable people in America,” said Russell L. Hirschhorn, senior counsel at Proskauer. “This decision will help elderly Americans and persons with disabilities regain the basic income they need to survive and make ends meet.”

Judge Stein’s order is the latest in a series of favorable federal court rulings challenging the SSA’s practice of using outstanding warrants to deny benefits. A related lawsuit in California, Martinez v. Astrue, resulted in relief for a class of more than 200,000 people who received hundreds of millions of dollars in retroactive benefits in addition to reinstatement of current benefits.

“The overwhelming majority of people who receive Social Security rely on those benefits for all or most of their income,” said McIntyre. “It is no wonder then that many people affected by this policy ended up homeless or having to move in with relatives or friends. Finding many of them will be extremely difficult.”

A copy of Judge Stein's order can be read here. Plaintiffs in the case are represented by the Mental Health Project of the Urban Justice Center, the National Senior Citizens Law Center and pro bono counsel from global law firm Proskauer Rose LLP.