AUGUSTA — A state judge Thursday approved the settlement of a class-action lawsuit filed on behalf of patients and former patients at the Augusta Mental Health Institute, setting in motion a series of far-reaching changes that officials said would cost more than $7 million in three years.

Superior Court Justice Bruce W. Chandler signed a consent decree implementing the settlement following an hourlong hearing in Augusta at which the plan was endorsed by lawyers for the state and advocacy groups that filed the original suit in February 1989. It envisions a reduction in the AMHI patient population and a corresponding expansion of community programs.

“A fair and equitable resolution” of the complaints raised in the lawsuit, said Helen Bailey, senior attorney for Maine Advocacy Services.

“Today is a historic day for the consumers” of mental-health care in Maine, said Richard M. Goldman, an Augusta attorney representing the Maine Civil Liberties Union.

Goldman stressed the agreement is only a conceptual stage, however, and said that “the difficult work, bringing this agreement to life, lies ahead.”

Assistant Attorney General Linda Crawford noted the presence of Mental Health Commissioner Robert W. Glover, Human Services Commissioner Rollin Ives and AMHI Superintendent Linda Breslin — all named as defendants in the suit — as evidence that the state is prepared to comply with the settlement.

“They feel that the voluminous (document) speaks for itself and they are prepared to implement it,” Crawford said in brief comments to the court.

Chandler, in approving the 131-page agreement, said he found the settlement “fair, adequate and proper” and challenged state officials to seize this “tremendous opportunity to place our state in the forefront” of treatment for the mentally ill.

The judge, who inherited the AMHI case from Justice Morton Brody when he was elevated to the state supreme court, said he expects to remain involved in the case for “the remainder of my judicial career and, frankly, it’s something I look forward to.”

Lawyers in the case said they expected Chandler to appoint the special master envisioned in the agreement by mid-September. The lawyers, who will make their own recommendations to the judge later this month, said they are seeking a candidate who is a lawyer with background in mental-health issues and experience in mediation.

The settlement, the product of eight months of negotiations, applies to between 2,000 and 3,000 people who have been patients at AMHI on or after Jan. 1, 1988. It also covers people admitted to the institution in the future, until the state has fully complied with terms of the settlement.

“The class is not closed today. It continues to grow,” Goldman told the judge.

The agreement calls for the number of non-forensic patients at AMHI to be gradually reduced to 70 by Aug. 1, 1995, including no more than 20 who require skilled nursing or intermediate care. On Thursday, the hospital had 280 non-forensic patients, including 97 in its nursing home unit, according to Tammy Woodard, secretary to Ric Hanley, AMHI’s chief operating officer.

Further, by Jan. 1, 1991, the state must design a “comprehensive mental-health system” that allows patients to the greatest extent possible to continue living in their communities in the least restrictive environment.

In addition, the state would have to finance various types of housing assistance, residential support programs and round-the-clock crisis-intervention services. It also would have to make “reasonable efforts” to provide local hospital services for patients requiring acute care and job-counseling and training programs.

Glover estimated that the initial implementation of the agreement by his department would cost $900,000 this year, primarily for planning and recruitment activities, and about $6 million for the two-year budget cycle that begins in July 1991.

Ives said compliance by his department would cost about $250,000 during that same period, and that the state expenditure would be matched by federal Medicaid money. He said the costs would stem primarily from hiring additional adult protective services staff members to reduce public-ward caseloads.

About two dozen people attended Thursday’s hearing, which Chandler described as an opportunity for patients and former patients covered by the settlement to air their views. None did, although a woman who described herself as a potential class member and a leader of a Portland advocacy group did address the court.

Lelia Batten of Portland, who said she has been hospitalized before for psychiatric care but not at AMHI, told the judge the agreement should be approved. But she said the proposal for individual treatment plans “scares me a little bit” because the patients themselves might not be given enough control over the contents of the plans.

“It needs to be based on the client’s actual needs,” Batten said.

Bailey responded that the settlement is designed to ensure that the patients are the moving forces behind their treatment plans.

The lawsuit that spawned the settlement was filed by four advocacy groups that alleged, among other things, that AMHI patients were denied adequate medical care, given too many drugs and unnecessarily locked in seclusion.