Health Net on Thursday agreed to reinstate coverage for 926 former members in California whose policies were canceled after they filed claims and to pay $3.6 million in fines, the Los Angeles Times reports. The company also will pay as much as about $14 million to reimburse expenses for medically necessary care that would have been covered had the policies not been cancelled.

In the last year, Health Net -- California's largest health insurer -- has been forced to pay a number of fines and penalties related to the company's policy rescission and cancellation practices, according to the Times. An investigation by the California Department of Insurance found that the company did not follow state laws when handling policyholders' claims and treated them unfairly. Health Net also will work with the department to make improvements to its cancellation and rescission practices and could face an additional penalty of as much as $3.6 million if a follow-up investigation finds that the company has not corrected all deficiencies, the Times reports.

The agreement allows Health Net to avoid any further penalties for potential legal violations uncovered by auditors. The company did not admit any wrongdoing. Chief Executive Jay Gellert said his company did "not necessarily agree with the California Department of Insurance," but the settlement was a chance "to move forward and make sure these affected individuals can obtain coverage" (Girion/Lifsher, Los Angeles Times, 9/12).

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