North Carolina and the U.S. Department of Justice have asked a federal court to end 14 years of oversight of the state's mental health housing settlement, after officials determined the state achieved substantial compliance with the terms designed to move adults with severe mental illness out of institutions and into community life. The joint motion, filed Friday, marks a turning point for a program that has reshaped how thousands of North Carolinians with serious mental illness live and receive care.
The filing came on September 11, according to WHKY, which reported on the joint motion and significant progress under the 2012 settlement agreement. That conclusion effectively closes out one of the longest-running federal civil rights interventions in the state's history, one that grew out of a 2011 Justice Department investigation. According to the U.S. Department of Justice, that investigation found North Carolina had violated federal civil rights laws by unnecessarily institutionalizing people with severe mental illness in large adult care homes, prompting the state to sign the settlement on August 23, 2012.
NCDHHS confirmed the development in a statement shared on social media Monday, saying federal officials had recognized the state's progress in helping people with serious mental illness live and receive support in their communities.
Thousands Moved From Institutions Into Stable Housing
The scale of the Transition to Community Living initiative is significant. The program has assisted more than 4,150 adults with severe mental illness in moving into stable community housing and diverted another 6,700 individuals from institutional adult care homes through screening and outreach, per the same WHKY account. Those screening and diversion efforts were designed to connect people in crisis with community services before they ever entered restrictive group settings.
The legal foundation for the settlement traces back to the U.S. Supreme Court's 1999 decision in *Olmstead v. L.C.*, which established that unjustified segregation of people with disabilities in restrictive settings violates Title II of the Americans with Disabilities Act, according to Disability Rights North Carolina. The decision addressed the opportunity for people with disabilities to live in integrated settings. The 2012 agreement applied that mandate directly to North Carolina's mental health system.
Housing, Peer Support, and Crisis Response Underpin the Model
The services that made the transition possible span several categories of care. Per Trillium Health Resources, the Transition to Community Living program includes permanent supportive housing rental subsidies, certified peer support, assertive community treatment, supported employment, and community crisis response. Certified peer specialists have performed direct outreach inside facilities to inform residents about housing options and community supports.
North Carolina's dependence on adult care homes in the first place traces to earlier state policy decisions. The reliance grew out of state mental health restructuring during the early 2000s, when psychiatric hospitals were downsized without sufficient funding allocated to establish local community treatment infrastructure, according to the Bazelon Center for Mental Health Law. The settlement led to continuing federal oversight of the state's mental health system.
State Officials Pledge Continuity After Oversight Ends
Following the joint court filing, North Carolina Health and Human Services Secretary Dev Sangvai stated that the state's commitment to community living will continue uninterrupted. NCDHHS also announced plans for a virtual town hall to gather public input on the program's future once federal oversight lifts, the WHKY report noted.
The move comes alongside other recent state investments in behavioral health infrastructure. On September 9, NCDHHS announced a multi-year $1.9 million investment to expand, accredit, and modernize North Carolina's Clubhouse network. In February, the article also referenced an executive order signed by Governor Josh Stein.
Targeted Programs Reach Those Caught in the Justice System
The state has also built programs aimed specifically at people with severe mental illness who intersect with law enforcement. In November 2025, NCDHHS launched a $9.5 million Forensic Assertive Community Treatment pilot project across five county regions to provide housing, mental healthcare, and vocational support to individuals involved with the criminal justice system, as reported by Hoodline. FACT teams bring together multidisciplinary specialists to support participants.
WHKY reported that services will continue after federal monitoring ends. For now, WHKY reported that services and the state's commitment to community living will continue after federal oversight ends.
