It will take more than a year for the N.C. Department of Health and Human Services to resolve disputes with hundreds of community support providers and thousands of their clients afflicted with mental illness or substance abuse.

There is a backlog of more than 5,000 individuals, most of whom are trying to reverse a decision to restrict or deny them a basic skill-building service called community support.

Appeals from more than 300 providers will be more complicated and time consuming. Most of them are fighting decisions by the state to make them repay money or kick them out of the program.

Appeals from individuals soared after the department tightened the screws last fall on ValueOptions Inc., a company paid by the state to look at requests for service and then authorize, amend or reject them.

"We've said to ValueOptions, 'You have got to get more in tune with our expectations of rehabilitative services,' " said Dempsey Benton, the new secretary of health and human services. "They're taking a much more critical look at the requests and, right or wrong, there are fewer requests, percentagewise, getting authorized."

The tougher scrutiny has resulted in a flood of appeals from individuals who want the government to pay for their care.

At first, the department let providers into the program on a "conditional" basis -- go to work now, qualify later. Now, the department wants to weed out providers it deems unqualified.

"What we're trying to do is change the definition of a provider and require the provider to have more qualifications," Benton said.

Government auditors concluded last year that providers had overbilled by about $59 million, and the department wants the money back. Through mid-January, the state had recovered about $14.8 million.

The most recent batch of letters demanding repayment was mailed in December, and the requests for hearings soon followed. The backlog of provider hearings went from 126 in December to 303 in January.

One reason providers appeal: Some are winning. The 12 completed cases recorded at the department's controller's office so far show that hearing officers have reduced the amount owed by 30 percent.

Keith Green, executive director of the Center for Behavorial & Social Change in Durham, said his company received a letter in July demanding repayment of $116,063. An audit had alleged improper documentation and overbilling.

Green, who said the company has about 25 clients, hopes his repayment will be cut to $30,000 or so.

"If you have to pay back the kind of money they're requiring, you're looking at the possibility of closing your business," he said.

Providers contend they were given vague descriptions of the work they could do and little or no instruction on what was allowed under the rules.

"None of us providers were properly prepared to go into this new mental-health reform," Green said.

Providers and individuals can appeal decisions from the department hearing to the state's Office of Administrative Hearings. Some people go straight to the administrative court.

Renee Montgomery, a Raleigh lawyer, filed appeals for seven community support providers in January, challenging assessments by local mental-health offices that they had provided unnecessary treatment. The companies contend that local reviewers were not qualified to second-guess decisions by doctors and others who ordered community support services.

"Those audits based on alleged lack of medical necessity will be fatally flawed," Montgomery said.