A proposed settlement agreement has been reached between the state and the Hawaii Disability Rights Center on a class-action lawsuit by individuals who were denied mental health services because of state policy changes.

The lawsuit was filed two years ago on behalf of about 250 residents who were denied eligibility for services after the Department of Health’s Adult Mental Health Division limited eligibility to individuals deemed to have more serious conditions such as schizophrenia and bipolar disorder. Individuals who suffered from conditions such as post-traumatic stress disorder and most forms of depression were no longer eligible under the policy that took effect on July 1, 2009.

With limited resources due to budget cuts, the Adult Mental Health Division under the Linda Lingle administration had to make a judgment on what was relatively more serious and what was relatively less serious, narrowing the criteria of eligibility to apply to those who suffered from conditions characterized by psychosis, said the division’s chief, Dr. William Sheehan.

The disability rights center filed a complaint, saying the state failed to follow rule-making procedures before changing the policy.

Under the proposed agreement, the state will offer evaluations to individuals in the class-action case who applied for services between July 1, 2009, and Dec. 16, 2010, and were denied eligibility due to the policy change. Sheehan said they will be re-evaluated under the 2004 criteria.

"If they’re found eligible under the old rules, they’ll be offered services," he said.

Louis Erteschik, executive director of the center, said, "I’m very pleased with the settlement. This settlement does achieve some glimpse of justice for people who were in that category and who were improperly denied services during that period of time. I’m very pleased that the state agreed to do that."

A fairness hearing to approve the proposed settlement agreement is scheduled for Sept. 7 before Circuit Judge Virginia Crandall.

Individuals in the lawsuit will be notified by mail, and a public notice will be published in the newspaper of the proposed settlement. Any individual who chooses to opt out of the settlement must submit a request by Aug. 31 to attorneys Paul Alston or J. Blaine Rodgers of Alston Hunt Floyd & Ing, who are representing the center.

More information can be found at the Hawaii Disability Rights Center’s website at www.hawaiidisabilityrights.org.