State levies $10 million fine against Anthem Blue Cross

State regulators Thursday evening imposed a $10 million fine on Anthem Blue Cross, saying the health insurer abruptly rescinded the coverage of some 1,770 people who received their medical care through the company.

The fine was part of an agreement between the state Department of Managed Health Care and Anthem Blue Cross. Under the terms of the pact — in which the health insurer did not acknowledge any wrongdoing — the company will offer coverage to the former enrollees, who will be able to purchase policies without under going medical underwriting.

"The fine is a record amount and sends a message that if you come to California to sell health insurance, you must play by the rules," said DMHC Director Cindy Ehnes.

The settlement concludes four months of discussions between the health insurer, the largest for-profit health carrier in California, and the state. Earlier in the day, Ehnes' office announced a similar agreement with Blue Shield of California, which included coverage offers for 400 patients who had their care rescinded, plus $5 million in fines. As in the Anthem Blue Cross settlement, Blue Shield will be required to offer coverage to the former members without requiring them to under go medical underwriting.

The actions Thursday completed months of rescission-related negotiations between the DMHC, which regulates HMOs, and five health plans – Kaiser, HealthNet, PacifiCare, Blue Shield and Anthem Blue Cross. According to the state, under the agreements the various health plans will be required to offer coverage to some 3,770 former enrollees.