Health Net said that it has reached an agreement to pay at least $1.95 million to California hospitals that were not paid when patients?individual insurance policies were rescinded.

The class action case, which was organized by the California Hospital Association and involved about 200 hospitals, pertains to Health Net? decisions to revoke or rescind policies between February 2004 and October 2007, which state regulators and critics have called overly aggressive.

The Woodland Hills company last year reached a settlement with the California Department of Insurance to offer coverage to 926 former members whose policies were revoked after they incurred medical bills, and pay $25 million in fines. The company also has changed its practices to reduce revoking policies of patients who did not mislead the company about prior conditions, including an independent third-party review process.

Health Net admitted no wrongdoing in the settlement. ?ealth Net is pleased to have resolved all existing litigation brought by former members and providers involving rescission practices,?Health Net said in a statement late Tuesday.

Under the terms of the settlement, Health Net will set up a compensation fund to reimburse hospitals for services they provided to rescinded members. The company will also give hospitals a list of rescinded patients.

?e are very pleased to have come to an agreement with Health Net that results in hospitals receiving substantial payments for the previously unreimbursed services that they provided to Health Net members who were rescinded,?the hospitals?lead counsel, Glenn Solomon at Hooper, Lundy and Bookman Inc., said in a statement.

The hospital group reached a similar settlement last year for $11.8 million involving patients who had policies with Blue Cross of California.

Health Net shares were up 21 cents, or 1 percent, to $15.31 in midday trading on the New York Stock Exchange.