After nearly four decades of legal wrangling, the District mental health system is no longer under court oversight.

On Thursday, a U.S. District judge approved a settlement in a class-action lawsuit against the city that was launched in 1974 by a group of psychiatric patients who sought a mental health system that offered more than a crumbling hospital where patients were subjected to substandard care.

 “It’s a very historic and memorable day,” Judge Thomas F. Hogan said. “And all sides should be proud of the work they did on this case.”

The settlement in Dixon v. Gray  marks a major milestone for the city, which has made vast improvements to its mental health system since the suit was filed .  

At that time, more than 3,600 patients were housed at St. Elizabeths Hospital in Southeast Washington, a mental institution that was plagued with troubles. The patients who filed the suit, including lead plaintiff William Dixon, sought better treatment for those confined to St. Elizabeths and demanded the hospital transfer patients whose doctors approved to alternative care facilities such as nursing homes.

Now, fewer than 300 patients are housed at the new St. Elizabeths Hospital, which opened in April 2010 in Southeast. More than 20,000 D.C. residents with mental health needs receive community-based care.

As part of the settlement, the District must build or subsidize an additional 300 housing units, provide more job counseling and reduce the number of youths sent to certain private treatment facilities.