The insured cardiologist obtained a disability policy from Lloyd's in 1999.  See Lagstein v. Certain Underwriters at Lloyd's, London, 2010 U..S. App. LEXIS 11836 (9th Cir. June 10, 2010).  In the event of disability, Lloyd's agreed to pay the insured $15,000 per month for up to sixty months. 

   In 2001, the insured developed heart disease, severe migraine headaches and other neurological problems.  A claim was submitted to Lloyd's.  By early 2002, no decision had been made on the claim, so the insured returned to work against the advice of his doctors.  In September 2003, the insured filed suit against Lloyd's for breach of contract, breach of the covenant of good faith and fair dealing, and unfair trade practices.  The district court stayed the lawsuit pending binding arbitration required by the policy.

   The arbitrators concluded that Lloyd's breached the contract and acted unreasonably.  The insured was awarded the full value of the policy, $900,000, plus $1.5 million for emotional distress.  At a subsequent hearing on punitive damages, Lloyd's objected that the panel's jurisdiction had ended once it issued the initial award.  Nevertheless, the hearing went forward and the insured was awarded punitive damages in the amount of $4 million. 

   Lloyd's then moved in the district court to vacate the arbitration awards on several grounds, including allowing a punitive damages hearing after the issuance of the initial award.  The district court vacated the awards, concluding their size was excessive and in manifest disregard of the law.

   The Ninth Circuit reversed.  The district court could not vacate an arbitration award simply because it disagreed with its size.  Moreover, the panel did not exceed its authority in holding a subsequent punitive damages hearing because the timing of the arbitration award was a procedural matter within the panel's interpretation.  The panel's conclusion that it retained jurisdiction was a plausible construction of the parties' agreement.   Accordingly, the Ninth Circuit reversed the district court's vacatur of the arbitration awards and remanded for confirmation of all of the awards.