The District of Columbia is seeking to seize tens of thousands of dollars from mentally retarded residents of Forest Haven and from other wards of the city who have accumulated the money in savings accounts over the years by holding jobs at the facility and with private companies.

Officials yesterday said they are going to court in an attempt to make the residents who have sizable private bank accounts eligible for federal Medicaid benefits by reducing their account balances to less than $2,500, the program's cutoff for personal assets. By making its wards eligible for Medicaid, the city can ask the federal government to help pay for their care at private facilities, saving the city millions of dollars.

The action comes at a time when the city must find new homes for Forest Haven residents as a result of a federal court order stating that the facility must be closed by 1987 because of inadequate conditions there. Officials are acting under a local law that allows the District to assess the cost of providing care against the estates of mentally retarded persons who are wards of the city.

City officials said that if the court agrees, the money from the wards' bank accounts will go into the District's general coffers. They had no precise estimate of how much money the city would receive from its wards, or how much the city would save by having Medicaid share the costs.

A lawyer for one of the residents who stands to lose more than $11,000 he earned scrubbing floors, dumping trash and doing other odd jobs, told a D.C. Superior Court judge yesterday that the result of the city's action "is tantamount to slavery . . ."

"My client is not someone who arrived at Forest Haven with a million dollars or an uncle with a yacht," the attorney, Kenneth H. Rosenau, told Judge Samuel B. Block. "He earned this money with his own sweat and blood."

"It's hard to say it's fair. But where do you draw the line about what's fair?" said Tony Records, supervisor of volunteer advocacy services with the D.C. Association for the Mentally Retarded. "They will be receiving better services as a result of this."

Reed Tuckson, newly installed chief of the city's Mental Retardation and Developmental Disability Administration, an agency under the city's Department of Human Services, also defended the action, saying: "We're not impinging in any way on these people's ability to enjoy life. It's not a willy-nilly kind of random taking."

"If the federal government is quite willing to give us money for our clients' care--geez! Let's go after it!" Tuckson said.

Approximately 100 of the estimated 1,000 retarded persons currently under city care at Forest Haven in Laurel and various community-based homes are potential targets of the plan, he said. So far, city corporation counsel attorneys have initiated court actions in nearly 20 cases, an official there said, all involving Forest Haven residents.

Judge Block yesterday heard arguments from two attorneys representing four Forest Haven residents. Both attorneys argued that the city's action denies their clients' constitutional right to due process. Block took the cases under advisement and scheduled additional hearings for next month.

While the city can assess its costs in providing care against the estates of mentally retarded city wards, it has until now only regularly filed suit against the estates of patients who have died. This is the first time, officials said, that the city has initiated similar action against patients still living.

For some patients, the amounts in question represent decades of savings from jobs and Supplemental Security Income, all laid away in interest-drawing bank accounts and supervised by the Department of Human Services.

The city currently pays between $55,000 and $60,000 a year to care for each patient at Forest Haven. For those eligible for Medicaid, federal benefits reduce the city's cost 48 percent.

"We're moving people into the community so they can enjoy the full benefits of life," Tuckson said. "To do that takes a lot of money. And Medicaid pays for that."

Part of the city's plan is to encourage mentally retarded wards to spend as much money as they can on personal items before the funds are taken away in court.

Some, like a group that recently traveled to the Special Olympics in New Orleans and to Disney World in Florida, are spending it on travel. Others are being advised to use the money buying television sets, radios, winter clothes and shoes.

William, one resident who testified in court yesterday, recently purchased $500 worth of new clothes. William has lived at Forest Haven since his parents committed him there 23 years ago, when he was 12. He has more than $13,000 in his account.

William earned most of that scrubbing floors and stacking chairs in dining rooms at the facility. He continues to get up at 5:30 each morning to do his chores, six hours a day, five days a week, earning about $2 an hour in city stipends.

He has also worked at a liquor store, a motel and a diner over the years, receiving $10 a week spending money, plus cigarettes and cigars, for his chores, while the rest is deposited in the bank.

"To tell these people that you're working for an hourly wage, and let them do that for 50 years and then take it away from them is a cruel hoax and comes damn close to slavery," said Rosenau, who represents William.

Judge Block disagreed.

"Bill is not a slave of the District of Columbia," he said after listening to William's testimony. "I just want him to understand that, and that the court would not allow that to happen."