LOS ANGELES (Reuters) - The city attorney of Los Angeles on Wednesday filed a lawsuit against Blue Shield of California, accusing the health insurer of unlawfully canceling policies after patients became hospitalized or seriously ill.

The Los Angeles Superior Court lawsuit seeks $1 billion in damages against the not-for-profit health plan.

Blue Shield said in a statement the legal action was totally without merit, noting Los Angeles City Attorney Rocky Delgadillo never spoke to anyone in the company or asked for any documents from its files.

"In filing this complaint, the City Attorney has seized on a hot topic in an attempt to advance his political future," Blue Shield said.

The lawsuit claims that Blue Shield has, since at least 2002, used false and misleading advertising to induce more than 400,000 California consumers into purchasing health coverage, Delgadillo said.

The lawsuit also claims that Blue Shield, with about 3.2 million members, has illegally delayed or denied the payment of thousands of medical claims.

Similar lawsuits have been filed against Health Net Inc and Blue Cross of California.

(Reporting by Deena Beasley; Editing by Braden Reddall)

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