The state has agreed to pay $4.4 million to settle a landmark lawsuit filed by a couple who alleged the Department of Education failed to provide their daughters with appropriate autism-specific services during the girls’ formative years in the 1990s.

Attorneys say the suit could have far-reaching implications for other cases filed on behalf of special-needs students who have not received a free, appropriate public education, as federal law requires.

 "Clearly, school districts are on notice that a denial of meaningful access for kids can expose them to significant damages,"

said Susan Dorsey, lead attorney for the Levin Education Access Project, a nonprofit that assisted the family with the case. 

"The rest of the country will be looking at this decision. It’s a huge victory for children."

The suit was filed in 2000, and has been through multiple appeals processes.

Joshua A. Wisch, special assistant to the state attorney general, said, "We’re glad that both sides could reach an agreement that was mutually acceptable." 

The settlement still must be approved by the state Legislature, governor and Board of Education.

If approved, the money will go into a trust for the two autistic sisters — Natalie and Michelle Horsley, now 20 and 21.

Their father, Mark, said his daughters can never live independently.

He called the settlement, after more than a decade of litigation, "surreal."

"It has just had a life of its own," he said. "We kind of knew we had to stick with it, but we didn’t know we were going to be in it for this long." 

Horsley said the lifetime care of his daughters "is one of those things that keeps you awake at night."

In the case, Horsley and his wife, Rie, alleged that their daughters were victims of "deliberate indifference" by the DOE, and that the department knew or should have known that the two were not receiving appropriate educational services. 

Horsley’s daughters were diagnosed as autistic when they were 2 and 3, have limited ability to interact with people and have very limited communication skills. 

The family contends if the two had received appropriate services, they likely would have made much more progress and potentially would have been able to live at least semi-independently and work in a "sheltered environment." 

Attorney Michael Livingston, who represented the family along with lead attorney Stanley Levin, said the case has established legal precedent that "can be relied on by other litigants" in Hawaii and elsewhere. 

For one, he said, the case helped to define the standard of "deliberate indifference" for the courts in claims for compensation under the federal Rehabilitation Act. 

At several points, the lawsuit appeared doomed. But in 2010, the Horsleys won a big victory when a three-judge panel of the 9th U.S. Circuit Court of Appeals unanimously overturned a decision by U.S. District Judge Manuel Real, who had granted the state’s request to throw out the lawsuit. 

The case came back to Hawaii, and a trial was scheduled to begin in November.

While the case was filed in 2000, the DOE’s alleged "deliberate indifference" occurred in the 1990s, when the special education system in Hawaii was "in chaos," Livingston said. 

In 1993, the mother of Maui special needs student Jennifer Felix filed what would become a massive class-action suit on behalf of all learning-disabled children in the islands over a dearth of services available to them. 

A year later, Livingston said, Michelle Horsley began receiving special education services in public schools. Her sister followed in 1995. 

The Felix case spurred a historic consent decree — and federal oversight — that lasted until 2005, during which time the DOE pledged to bolster services for special needs students. 

Livingston said he believes special education services have improved markedly from the 1990s, but adds "those cases will probably still arise." 

Dorsey said she still has significant concerns about services for special needs students and added, "there still needs to be serious reform." 

The settlement comes as the department looks to bolster its services for special needs students, including those with autism.

This year, the DOE kicked off eight "centers of educational excellence" aimed at serving as model special education programs and giving teachers and staff hands-on training. The department has also contracted with consulting firms to help improve special education services, offer training and determine the effectiveness of revamped programs. 

There are about 19,000 special education students in Hawaii’s public schools, and about 7 percent — or 1,300 — have been diagnosed with autism spectrum disorders.