As scrutiny over cancelled policies grows, the California Department of Managed Health Care ruled that Kaiser Permanente illegally canceled coverage for a Northern California woman. The cancellation was illegal, the agency ruled, because there was no evidence the woman intended to deceive the health maintenance organization about her medical history when completing her application for coverage. With the order against Kaiser, all three of the state's largest health plans are now embroiled in the controversy. Blue Cross of California, owned by Indianapolis-based WellPoint Inc., recently settled more than 70 lawsuits and claims filed by patients who accused the state's largest health insurer of illegally canceling their coverage after they got sick. Suits have also been filed against Blue Shield of California.

Kaiser faulted the woman for not disclosing an appointment she had for arm and neck pain. The agency ruled the rescission illegal because Kaiser made no showing that the woman willfully misrepresented her health history.

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