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Yesterday, the California Department of Managed Health Care ordered that the health insurance policies of 26 people whose policies had been rescinded be reinstated. Cindy Ehnes, the director of DMHC also ordered the 5 largest health insurance companies in California to review all policies rescinded since 2004.

This is welcome news for people whose insurance policies were rescinded only after their insurance company found out that they, or a family member, had become seriously ill. A rescission is particularly damaging to a consumer because the policy is effectively canceled retroactively, and the insurance company does not pay outstanding claims.

The recent actions by the DMHC, and numerous lawsuits filed by private firms, seek to hold insurance companies responsible for their actions. The insurance companies affected include Blue Shield, Anthem Blue Cross, and Kaiser. According to the Sacramento Bee, a spokesman for Blue Shield declined to comment.

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