In the first sanction of its kind, California's top HMO regulator fined Blue Cross on Thursday for illegally canceling a woman's medical policy because she did not disclose corrective surgery she had 23 years earlier. In announcing the fine, Cindy Ehnes, director of the Department of Managed Health Care, said that insurers are prohibited from canceling health policies unless a policyholder lied.

In the case at hand, her department found that Blue Cross broke the law in two ways. First, the agency said, the insurer failed to adequately underwrite, meaning scrutinize the woman's medical history before issuing her policy. Second, it found that Blue Cross "failed to prove that the member willfully misrepresented her health history."

The fine comes in the wake of scores of lawsuits filed in California in recent months by consumers. They say they were stuck with medical bills after insurers canceled them for making innocent mistakes on their applications or for leaving out health history details the individuals viewed as insignificant or irrelevant.