The settlement brought about a significant transformation of New Jersey’s mental health service system.   The state greatly expanded supported housing and other community services for people with serious mental illness, helping thousands of people avoid needless hospitalization.  It also made community mental health services more robust to ensure that people with the most significant disabilities are successfully served in supported housing, improved hospital discharge planning practices, and secured additional federal Medicaid dollars to finance community mental health services.  As a result of the state’s efforts, the census of New Jersey’s state psychiatric hospitals has decreased by more than one-third since the time that the case was filed.

The Bazelon Center and Disability Rights New Jersey (DRNJ) served as counsel for the plaintiff, representing state hospital residents found by courts to be ready for discharge, but with no appropriate community setting to which they could be discharged.  Such individuals are placed on what is known as “conditional extension pending placement,” or “CEPP” status.  The settlement resolved claims brought to enforce the Americans with Disabilities Act’s “integration mandate.” At the time the case was brought in 2005, approximately half of the individuals served by New Jersey’s state psychiatric hospitals were on CEPP status, and many remained hospitalized for lengthy periods. Now, individuals on CEPP status account for only 22% of the state hospital population.

In a July 29, 2009, settlement agreement signed with DRNJ, the New Jersey Department of Human Services agreed to release hundreds of people in the state psychiatric hospitals after years of institutionalization and to provide these individuals with the services they need to live independent, integrated lives in the community.

Under the agreement, the state agreed to provide community residential services for the approximately 300 people who have been awaiting discharge since before July 1, 2008. The state also agreed to develop 1,065 new supportive housing units and other similar community settings before 2014 to eliminate the backlog of hospital residents awaiting discharge and prevent a recurrence of the problem.

The agreement settles a 2005 lawsuit, DRNJ v. Velez, brought in New Jersey federal court on behalf of DRNJ and its constituents by the Bazelon Center, the law firm of Pepper Hamilton and DRNJ attorneys. The suit challenged the illegal confinement of nearly 1,000 individuals, all of whom had been adjudicated ready for discharge from New Jersey’s four state psychiatric hospitals. The complaint alleged that the state’s failure to provide community services for these people violated its duty under the Americans with Disabilities Act (ADA) and the U.S. Supreme Court’s Olmstead decision to serve people with disabilities in the most integrated setting appropriate to their needs. The complaint also alleged violations of the state’s due process obligations under the 14th Amendment to the Constitution.

These individuals have remained in psychiatric hospitals under New Jersey’s Conditional Extension Pending Placement (CEPP) commitment status, which allows continued hospitalization of a person who is ready for discharge if no appropriate community services are available. According to the court complaint, the state abused its CEPP authority by failing to develop suitable community residences and by confining many of these individuals long beyond their need for hospitalization.

The agreement obligated the state to implement a plan to ensure the timely transfer of all CEPP people into the community.

In March of 2017, the conclusion of the settlement agreement was announced.

The settlement resulted in dramatic improvements to the state’s system of community services. The state significantly expanded its supportive housing capacity for people with serious mental illness, enabling thousands of individuals to avoid needless institutionalization. The state developed 1436 new supportive housing units for individuals on Conditional Extension Pending Placement (CEPP) status (individuals that were determined by a court to be ready for discharge but lacked the appropriate setting available to which to be discharged) and individuals at risk of admission to state psychiatric hospitals.

Community services for individuals with serious mental illness became significantly more robust, and the state secured new federal Medicaid dollars to help finance those services. The state also made important improvements to discharge planning practices.

As a result of these various measures, the census of the state hospitals has decreased by more than one-third since the time that this case was filed. Individuals on CEPP status accounted for nearly 50% of the state hospital population at the time the case was filed and now account for only 22% of that population.


U.S. District Court for the District of New Jersey


May 19, 2005


Closed (March 2017)


New Jersey Protection and Advocacy, Inc.


James Davy, in his Official Capacity as Commissioner of Human Services for the State of New Jersey