The Social Justice Network, an advocacy group based in Sydney, has referred more than 40 cases to a law firm to assess whether they are eligible to join a lawsuit against the Australian government, the Sydney Morning Herald reported.
The lawsuit seeks compensation for asylum seekers who developed mental illnesses while in detention.
"This could cost Australia hundreds of millions of dollars," said the network's spokesman, Jamal Daoud. "We want to see these people compensated because they have suffered a lot. A lot of them immediately after they were released into the community were granted disability pensions and were very young people."
The law firm already has argued successfully several compensation cases for former detainees.
Attorney Ben Phi said the government is obligated to provide adequate medical and psychiatric services to detainees found to be refugees wherever they are held.
Last year, Australia paid $18 million in compensation to asylum seekers for unlawful detention and $5 million for negligence involving former detainees.
Refugees who come out of detention centers with mental illnesses are "already at a serious disadvantage rather than being able to go out to work and contribute," Phi said.