California Department of Managed Health Care on Thursday said it had assessed a $200,000 fine against Blue Cross of California for inappropriately canceling coverage for enrollees.

The fine is the first to be imposed by state regulators following numerous allegations that plans operating in the state have been illegally rescinding individual policies after a claim is made. The department also is investigating similar complaints made against San Francisco-based Blue Shield of California.

The state HMO regulator began investigating Blue Cross in late 2005 following individual consumer complaints about the rescission of policies due to omitted health information on applications. The investigation was subsequently expanded in March to include systemic problems at other plans, including a lack of clear pre-enrollment policies, procedures, and confusing applications.

The department said it based the fine on two findings: that Blue Cross had failed to complete pre-enrollment medical underwriting and to resolve all reasonable questions about an applicant’s condition before issuing health coverage; and later failed to prove that the member willfully misrepresented their health history.

In likely anticipation of the announcement, Thousand Oaks-based Blue Cross, put out a press release earlier this week saying it would change some of its procedures for canceling individual health insurance policies. The insurer controls around half of that market.

The changes include creating an ombudsman and revising its appeal process. Despite the policy changes, Blue Cross, an affiliate of Indianapolis-based WellPoint Inc. maintained that it had done nothing wrong.