The health insurance bill, AB 2 by Assemblyman Hector De La Torre (D-South Gate), addressed a practice known as rescission, a practice The Times has reported extensively about. It can involve insurance companies removing patients with serious, costly illnesses from their rolls retroactively.

The governor vetoed 229 of the bills, but did not carry through on his threat to reject hundreds more as punishment for legislative leaders' failure to reach a bipartisan deal on upgrading the state's water system. Schwarzenegger said sufficient progress had been made in the water talks to move the bills off his desk.

Gov. Arnold Schwarzenegger vetoed a measure that would have restricted the ability of insurance companies to cancel the policies of sick patients and signed into law a bill honoring Harvey Milk as he rushed to act on 704 bills before their midnight signing deadline Sunday.

Congressional investigators uncovered cases in which insurance officials were rewarded by their companies for finding excuses -- such as a form being filled out incompletely during enrollment -- to take policies away from some of the sickest patients.

Schwarzenegger said he supports protecting such patients but state regulators have implemented reforms that are doing so, significantly decreasing the number of rescissions since 2005.

"The market has changed -- and it is because of my Administration’s strong action in this area," he wrote in his veto message. He also criticized provisions of the bill that he said benefited "trial lawyers rather than consumers."

Other bills he rejected included bids to force any extension of the 710 Freeway to be done underground, ban pay hikes for top administrators at public universities in bad budget years and tighten oversight on fertility clinics.

Those he signed included a measure to create a day of recognition for gay activist and political leader Harvey Milk, one intended to combat human trafficking and an anti-drunk-driving bill requiring DUI offenders in some counties to install devices in their vehicles that test blood-alcohol content before the vehicles can be started.

Schwarzenegger also called a special legislative session on water to start this week.

-- Evan Halper in Sacramento

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