Health net and California department of insurance has signed an agreement that they would settle of about $25 million for allegations regarding unfair claims and annual health coverage. Health net would pay $3.6 million in penalties and $14 million in refund for medical charges to the California department of insurance. California department of insurance would issue a substitute health care coverage to 926 people whose policies were rescinded by woodland hills. Health net would change its application form, agent training, under process and customer notifications. They are also planning to establish a third part review process for future decisions regarding rescinding coverage.

If health net did not pay all the fines on time, California department of insurance would fine an additional $3.6 million. Insurance commissioner said that the health net was highly cooperative, and they have made changes in underwriting and rescission practices which will set an example to other health insurers. Health insurance in California is being regulated by two agencies. The insurer has been facing many lawsuits, fines and penalties for thousands of medical claims.