Now, 26 policy holders will get their health insurance back and their past doctor bills paid. But the historic order opens the door for thousands of other Californians who were cancelled to also be reinstated.
The industry points out, though, rescissions are only a tiny percentage of the 2.6 million people with individual policies.
"What that says to me is that 99.9 percent of the folks who've gotten individual coverage have done the right thing, and their coverage is there for them when they need it," said Chris Ohman of the California Association of Health Plans.
The Schwarzenegger administration has been cracking down on health insurers since 2004, levying significant fines for rescission practices and for paying bonuses to employees who managed to cancel a certain number of policies. Just Wednesday, the city of Los Angeles sued Anthem Blue Cross for selling coverage and then reneging when treatments got expensive.
"No one was trying to fraud them at all, which they have accused me of. I was just trying to get insurance," said Wittney Horton, a cancelled policy holder.
A state-appointed arbiter will now go through thousands of cancellations that have occurred since 2004. Anyone who didn't outright lie on their application could get their health coverage back and past doctor bills paid.