Setuid Error reported by Passenger

I am running a Ruby/Rails application on a dedicated server and running into a very strange problem.
Everything seems to work fine for days, but then randomly I get a nasty Passenger error (trace below) and at that point the application becomes unusable and I cannot even access the prodaccount vi PuTTY, giving me a “Connection Closed” message. I can get into any other account on the same server, but not the prodaccount.
I tried restarting Apache but nothing seems to work other than rebooting the server, and then things run fine for days until I hit this error again.
There is no trace in the production log about this issue, so I am at a loss what is going on. Support also has no clues.
This error doesn’t seem to be related to load because it happens when there is load or absolutely no load on the system

Has anyone seen this problem and found a solution?

Much thanks

Error message:
Operation not permitted - setuid
Exception class:
Application root:

0 /dhlpassenger/liblphusion_passenger/utils.rb 729 in ‘switch_user’
1 /dh/passenger/Iib/phusion_passenger/utils.rb 729 in ‘lower _privilege’
2 /dhlpassenger/liblphusion_passenger/utils.rb 198 in ‘prepare_app_process’
3 /dh/passenger/lib/phusion_passenger/classic_rails/application_spawner.rb 176 in ‘initialize_server’
4 /dhlpassenger/liblphusion_passenger/utils.rb 563 in ‘report_app_init_status’
5 /dh/passenger/lib/phusion_passenger/classic_rails/application_spawner.rb 174 in ‘initialize_server’
6 /dh/passenger/lib/phusion_passenger/abstract_server.rb 204 in ‘start_synchronously’
7 /dh/passenger/lib/phusion_passenger/abstract_server.rb 180 in ‘start’
8 /dhlpassenger/liblphusion_passenger/classic_rails/application_spawner.rb 149 in ‘start’
9 /dh/passenger/lib/phusion_passenger/spawn_manager.rb 219 in ‘spawn_rails_application’
10 /dh/passenger/liblphusion_passenger/abstract_server_collection.rb 132 in ‘lookup_or_add’
11 /dh/passenger/lib/phusion_passenger/spawn_manager.rb 214 in ‘spawn_rails_application’
12 /dh/passenger/liblphusion_passenger/abstract_server_collection.rb 82 in ‘synchronize’
13 /dh/passenger/lib/phusion_passenger/abstract_server_collection.rb 79 in ‘synchronize’
14 /dhlpassenger/liblphusion_passenger/spawn_manager.rb 213 in ‘spawn_rails_appIication’
15 /dh/passenger/lib/phusion_passenger/spawn_manager.rb 132 in ‘spawn_application’
16 /dhlpassenger/liblphusion_passenger/spawn_manager.rb 275 in ‘handle_spawn_appIication’
17 /dh/passenger/lib/phusion_passenger/abstract_server.rb 357 in ‘send
18 /dh/passenger/lib/phusion_passenger/abstract_server.rb 357 in ‘server_main_loop’
19 /dh/passenger/lib/phusion_passenger/abstract_server.rb 206 in ‘start_synchronously’
20 /dh/passenger/helperscripts/passengerspawn-server 99