LOS ANGELES, Nov 15 (Reuters) - Kaiser Foundation Health Plan, the largest not-for-profit U.S. health maintenance organization, on Friday said it will pay $1 million to settle a California state agency's allegations that in 1996 it did not diagnose or treat an ill patient in a timely manner.

The payment ends legal disputes over the fine levied by the California Department of Managed Health Care in 2000 after an investigation of the death, at a Kaiser facility in Oakland, California, of Margaret Utterback from an abdominal aortic aneurysm, said Daniel Zingale, director of the health care agency.

"This is a real demonstration of Kaiser's willingness to move forward and work with the agency," he said.

The fine is the largest the state has ever imposed on a full-service health plan, he said.