In the 

United States Court of Appeals 

For the Seventh Circuit ____________________ 

No. 19-2336 

STANDARD SECURITY LIFE INSURANCE COMPANY OF NEW YORK,

et al., 

Plaintiffs-Appellees, 

v.

FCE BENEFIT ADMINISTRATORS, INC., 

Defendant-Appellant. 

____________________ 

Appeal from the United States District Court for the 

Northern District of Illinois, Eastern Division. 

No. 19 CV 64 — Ronald A. Guzmán, Judge. 

____________________ 

ARGUED MAY 28, 2020 — DECIDED JULY 28, 2020 

____________________ 

Before MANION, KANNE, and WOOD, Circuit Judges. 

WOOD, Circuit Judge. This case had its origins in an Administrative Services Agreement that Standard Security Life Insurance Company of New York and Madison National Life 

Insurance Company, Inc. (collectively, the “Insurers”) entered 

into with FCE Benefit Administrators, Inc. (“FCE”). Under 

that agreement, FCE administered health insurance policies 

underwritten by the Insurers. After a few years, however, the 
2 No. 19-2336 

Insurers became dissatisfied with FCE’s performance, and so 

they invoked the Agreement’s arbitration clause. 

The arbitration proceeded in two phases. In Phase I, the 

arbitrators awarded the Insurers damages of more than five 

million dollars. The Insurers attempted to confirm this award 

in the Northern District of Illinois, but the district court concluded that this effort was premature because the case was not 

yet ripe for adjudication. This was so because the arbitrators 

had not yet resolved all matters that had been submitted to 

them. In Phase II, the arbitrators denied the Insurers’ remaining claim and FCE’s counterclaim. After the conclusion of 

Phase II, the Insurers once again sought confirmation. This 

time, the district court confirmed the arbitration results in 

their entirety, meaning both the Phase I and Phase II awards. 

FCE now appeals from the confirmation of the Phase I award. 

Finding no reason to set aside the district court’s conclusion, 

we affirm its judgment. 

I 

The parties entered into the initial agreement effective January 1, 2011; four years later, they amended it, but they made 

no changes material to this case. The Agreement assigned to 

FCE the job of serving as the third-party administrator for policies underwritten by the Insurers. Under Section 18 of the 

Agreement, the parties promised to settle most disputes “by 

arbitration in accordance with the rules for commercial arbitration of the American Arbitration Association (or a similar 

organization) in effect at the time such arbitration is initiated 

... .” (There was an exception, which we discuss below, for 

indemnity disputes.) 
No. 19-2336 3

In May 2015, the Insurers, unhappy with FCE’s performance, terminated the Agreement. Two years later, alleging 

that FCE had breached many of its obligations under the 

Agreement, the Insurers filed a formal arbitration demand 

with FCE. They alleged that FCE had failed to remit premiums, had failed to process healthcare claims in a timely and 

proper manner, and had taken excessive and unearned fees. 

The Insurers also alleged that FCE caused them to incur regulatory penalties and fines. FCE counterclaimed, asserting 

that the Insurers wrongfully terminated the Agreement. 

As required by the Agreement, an arbitral panel consisting 

of two party-designated arbitrators and an umpire was assembled. It scheduled a hearing for September 2018. In July 

2018, FCE requested a continuance for discovery purposes, 

and it sought permission to file an amended counterclaim. 

The arbitrators issued an interim order on July 27, 2018, denying FCE’s request for a continuance but granting its motion 

for leave to file an amended counterclaim. The order stated 

that “[t]he counterclaims will be presented in a second phase 

of the Hearing which will take place in November/December 

of this year.” The parties and the arbitrators referred to this 

bifurcated process as “Phase I” and “Phase II.” 

The Phase I hearing was held on September 25−29 and October 25, 2018. A month later, on November 30, the arbitral 

panel discussed the evidence at a post-hearing teleconference. 

Afterwards, the panel asked the parties to submit their proposed awards for Phase I. Each side did so, and on December 

31, 2018, the panel issued a document entitled “Partial Final 

Award – Phase I” (the “Phase I Award”), which read in pertinent part as follows: 
4 No. 19-2336 

The Panel in the above-captioned arbitration, duly appointed by mutual agreement of the parties, upon consideration of all documents, arguments, and evidence 

submitted by Petitioners [Standard] and [Madison] 

(collectively “Petitioners”) and Respondent [FCE], and 

after having held a full hearing of Phase I of this arbitration from September 25 through September 29, October 25 and November 30, 2018 hereby renders its Partial Final Award as follows: 

1. Petitioners were within their rights to terminate the 

amended Agreement for cause. 

2. FCE shall pay to Petitioners the principal amounts 

due with respect to each Category of Damages as 

set forth in the chart annexed as Exhibit A hereto, 

together with interest calculated thereon at the rate 

of 5% per annum, as set forth therein. Such payment shall occur within twenty (20) business days 

of the date of this Partial Final Award. After such 

time, interest shall run at 9% per annum. 

3. Each party shall bear its own costs, including the 

costs of its party-appointed arbitrator. The parties 

shall split equally the costs of the Umpire and the 

catering expenses associated with the Hearing. 

4. The Panel members shall be paid within thirty (30) 

days of the date hereof. 

5. All other claims for relief by the parties are denied. 

A chart attached as Exhibit A, “Damages Owed to Petitioners,” provides for an award of $5,348,352.81 to the Insurers. 
No. 19-2336 5

Three days later, on January 3, 2019, the Insurers filed a 

motion to confirm the Phase I Award under the Federal Arbitration Act, 9 U.S.C. § 9, in the district court for the Northern 

District of Illinois. FCE responded that the motion was premature because the arbitration had not concluded. Alternatively, FCE moved to vacate portions of the Phase I Award 

under 9 U.S.C. § 10. 

While the motions were pending in the district court, 

Phase II of the arbitration proceeded. On January 18, 2019, 

FCE requested that the arbitrators reconsider the Phase I 

Award. The panel held the Phase II hearing on February 

11−15, 2019, and then denied FCE’s request to reconsider the 

Phase I Award on February 28. 

Meanwhile, on March 13 the district court entered an 

opinion and order dismissing the Insurers’ action without 

prejudice. The court determined that the matter was not ripe 

for adjudication because the panel had not finished the arbitration. This was actually mistaken: at the time the court entered its opinion and order, it was unaware (because the parties had not informed it) that two days before, on March 11, 

the arbitral panel entered this “Final Phase II Award” (the 

“Phase II Award”): 

The Panel in the above-captioned arbitration, duly appointed by mutual agreement of the parties, upon consideration of all documents, arguments, and evidence 

submitted by Petitioners [Standard] and [Madison] 

(collectively “Petitioners”) and Respondent [FCE], and 

after having held a full hearing of the newly asserted 

claims in Phase II of this arbitration from February 11 

through February 15, 2019, hereby renders its Final 

Phase II Award as follows: 
6 No. 19-2336 

1. FCE’s claim for lost profits damages is denied. 

2. Petitioners’ claim for reimbursement of excessive 

administrative fees taken by FCE on limited medical benefits plans in the amount of $477,810.00 is denied. 

3. Each party shall bear its own costs, including the 

costs of its party-appointed arbitrator. The parties 

shall split equally the costs of the Umpire and the 

catering expenses associated with the Hearing. 

4. All other claims for relief by the parties are denied. 

5. The Panel members shall be paid within thirty (30) 

days of the date hereof. 

After the district court issued its opinion, the Insurers filed 

a motion for leave to reinstate the case and to file a second 

amended petition to confirm both the Phase I and Phase II 

Awards. The court granted the motion and ultimately affirmed both the Phase I Award, over FCE’s objections, and the 

Phase II Award. 

II 

“Judicial review of arbitration awards is tightly limited.” 

Baravati v. Josephthal, Lyon & Ross, Inc., 28 F.3d 704, 706 (7th 

Cir. 1994). Confirmation is “usually routine or summary,” 

Hasbro, Inc. v. Catalyst USA, Inc., 367 F.3d 689, 691−92 (7th Cir. 

2004), and a court will set aside an arbitration award “only in 

very unusual circumstances,” First Options of Chicago, Inc. v. 

Kaplan, 514 U.S. 938, 942 (1995). “With few exceptions, as long 

as the arbitrator does not exceed [her] delegated authority, 

her award will be enforced. This is true even if the arbitrator’s 

award contains a serious error of law or fact.” Butler Mfg. Co. 
No. 19-2336 7

v. United Steelworkers of Am., AFL-CIO-CLC, 336 F.3d 629, 632 

(7th Cir. 2003). We review “a district court’s decision confirming an arbitration award under ordinary standards: accepting 

findings of fact that are not clearly erroneous and deciding 

questions of law de novo.” Slaney v. Int’l Amateur Athletic Fed’n, 

244 F.3d 580, 592 (7th Cir. 2001). 

FCE offers three reasons why the district court should not 

have confirmed the Phase I Award. First, it argues that the 

Phase II Award supersedes the Phase I Award such that the 

district court could confirm only the Phase II Award. Second, 

FCE contends that part of the Phase I Award must be vacated 

because the arbitrators exceeded their authority by hearing 

and deciding the Insurers’ indemnification claims. Third, it 

asserts that it was reversible error for the district court to confirm the portion of the Phase I Award labeled as damages for 

“embezzlement.” 

A 

We begin with FCE’s assertion that the Phase II Award encompassed the entire dispute between the parties and thus 

superseded the Phase I Award. FCE argues that the Phase II 

Award somehow erased the Phase I Award, rather like the 

idea that claims “merge” into a final judgment. It relies heavily on the fact that the Phase II Award states that “[a]ll other 

claims for relief by the parties are denied.” This language, 

FCE contends, indicates that the Phase II Award was the only 

final award and therefore the only award that could be confirmed. FCE relies primarily on two cases for support: Anderson v. Norfolk & W. Ry. Co., 773 F.2d 880 (7th Cir. 1985) and AO 

Techsnabexport v. Globe Nuclear Servs. & Supply GNSS, Ltd., 404 

F. App’x 793 (4th Cir. 2010). 
8 No. 19-2336 

These cases, however, are easily distinguishable. In Anderson, we considered two arbitration awards that addressed the 

same claims. We ultimately decided the case on standing, but 

the opinion also commented on the merits. The Anderson arbitrator’s first award ruled on two of the three issues submitted to him, but he determined that the parties “had not exhausted their efforts to negotiate a complete implementing 

agreement.” 773 F.2d at 881. This prompted him to “sen[d] the 

parties back to the bargaining table” to resume negotiations 

of a “final and complete disposition of all issues.” Id. Having 

“expressly reserved arbitral jurisdiction of the matter” in his 

first award, the arbitrator later approved the parties’ successfully negotiated commercial resolution as his “final binding 

award.” Id. We observed that because the arbitrator’s first 

award “expressly stated that he was resubmitting the matter 

to [the parties] for further negotiations in the hope that they 

could reach a complete resolution of all issues,” the arbitrator 

did not intend his first award to be final. Id. at 883. 

Unlike in Anderson, the record here indicates that the arbitral panel deliberately bifurcated the arbitration to decide discrete claims in each phase. The panel plainly intended the 

Phase I Award to be final for all of the Phase I claims. Why 

else would it have entitled the Phase I Award “Partial Final 

Award - Phase I”? Both the word “partial” and the word “final” eliminate any possible doubt on the matter. In addition, 

before the panel issued its Phase II Award, FCE asked it to 

reconsider the Phase I Award, but the panel denied that request. This again indicates the finality of the Phase I Award. 

And, although the Phase II Award states that “[a]ll other 

claims for relief by the parties are denied,” in context that 

phrase makes sense only if it refers to the claims that were 

under submission during Phase II—the “newly asserted 
No. 19-2336 9

claims in Phase II of this arbitration ... .” Only in that sense 

did the arbitral panel deny “[a]ll other claims for relief” that 

remained in Phase II. It already had told the parties that it was 

not re-opening the previously decided Phase I claims. 

FCE also relies on AO Techsnabexport, but it is no help either. In that case the Fourth Circuit declined to confirm the 

arbitrators’ initial award because they had not disposed of 

certain issues. The arbitral tribunal had held trifurcated hearings on a breach-of-contract claim. The Fourth Circuit explained that the partial award after the first phase did not “definitively dispose of any severable claim or constitute a final 

determination of the issues presented by the parties” and thus 

“was rendered moot by the tribunal’s conclusion in the final 

award that the contract was not enforceable.” AO Techsnabexport, 404 F. App’x at 800. As in Anderson, the AO Techsnabexport

arbitrators did not decide discrete claims in each phase. In 

contrast, the panel in this case bifurcated the claims and issued a final award after each phase for those specific claims. 

FCE also argues that the Phase II Award must supersede 

the Phase I Award because otherwise the district court’s decision is at odds with its first order in this action. Recall that the 

Insurers attempted to confirm the Phase I Award immediately 

after the conclusion of Phase I of the arbitration, and that the 

district court dismissed the action without prejudice as unripe. FCE contends that the district court’s dismissal proves 

that the Phase I Award was incomplete and unconfirmable. 

FCE is mixing apples and oranges here. The arbitrators did 

not face a stark choice of either issuing a complete final order, 

disposing of all claims of all parties, or remaining silent. They 

had the option of a middle ground, resolving one set of claims 

first and then another. This is common for first-instance 
10 No. 19-2336 

tribunals. District courts regularly do the same thing, and 

their interim decisions are not appealable unless the criteria 

for a final judgment under Federal Rule of Civil Procedure 

54(b) are satisfied. The arbitrators were equally entitled, for 

purposes of organizing their own work, to take up some 

claims before others. But that does not mean that the case was 

ready for the district court before it was fully resolved. These 

were two different tribunals, playing different roles in the 

process, and they were bound by different rules of finality. 

See Olson v. Wexford Clearing Servs. Corp., 397 F.3d 488, 491 

(7th Cir. 2005) (“In determining the finality of an arbitration 

award, [courts] consider whether ‘the award itself, in the 

sense of judgment, order, bottom line, is incomplete in the 

sense of having left unresolved a portion of the parties’ dispute.’”). There was no conflict between the district court’s two 

decisions. 

B 

Next, FCE argues that even if the Phase I Award was confirmable, a portion of it must be set aside because the arbitrators exceeded their authority under 9 U.S.C. § 10(a)(4) by 

hearing and deciding the Insurers’ indemnification claims. It 

is particularly concerned about the panel’s Phase I award of 

damages for “Fines & Penalties” imposed by the Texas Department of Insurance (TDI), and “Legal Fees & Costs” incurred by the Insurers in defending against the TDI action 

and against a separate U.S. Department of Labor action. FCE 

contends that the panel should not have awarded these damages under Section 17 of the Agreement because Section 18(a) 

of the Agreement expressly carves out such claims from the 

arbitration process. 
No. 19-2336 11

Section 17 of the Agreement provides for mutual indemnification. The arbitration clause refers to Section 17 in the following way: 

(a) In the event of any dispute between the parties 

which arises under this Agreement, except for a dispute 

arising under Section 17, such dispute shall be settled by 

arbitration in accordance with the rules for commercial 

arbitration of the American Arbitration Association (or 

a similar organization) in effect at the time such arbitration is initiated, in the manner set forth below. 

Should a dispute arise under Section 17, either party may 

elect to invoke Section 19 below. 

Section 18(a) (emphasis added). Section 19, titled “Submission 

to Jurisdiction,” says in pertinent part: 

(a) Any legal suit, action or proceeding arising out of 

or relating to Section 17 of this Agreement or the transactions contemplated hereby, when invoked by either 

party, shall be instituted in the federal courts of the 

United States of America or the courts of the State of 

Texas, in each case located in Dallas County, and each 

party irrevocably submits to the exclusive jurisdiction 

of such courts in any such suit, action or proceeding. 

FCE argues that under the plain wording of Section 18, all 

disputes arising under Section 17 are removed from the scope 

of the parties’ arbitration agreement. Any other interpretation, it contends, renders the language of Section 19, vesting 

“exclusive jurisdiction” for such claims in the federal and 

state courts of Texas, superfluous. Moreover, FCE argues, in 

this case the onus was on the Insurers, not FCE, to pursue the 
12 No. 19-2336 

indemnity disputes in court. FCE concludes that the Insurers’ 

failure to do so does not make those claims arbitrable. 

The district court interpreted these provisions differently. 

It concluded that the “only reasonable reading” of Sections 18 

and 19 as a whole is that “the parties agreed to arbitrate such 

disputes, unless one of the parties elected to invoke its right to 

litigate them in federal or state court.” This makes sense to us. 

The Agreement specifies that if a dispute arises under Section 

17, either party may elect to invoke Section 19. In other words, 

Section 19 is permissive and not mandatory. Section 19 confirms this reading by stating that a suit arising from Section 

17 will be instituted in the federal or state courts when invoked 

by either party. See Kochert v. Adagen Med. Int’l, Inc., 491 F.3d 

674, 679 n.2 (7th Cir. 2007) (“Contractual jurisdiction, venue, 

and forum clauses can be mandatory (exclusive) or permissive (nonexclusive).”). 

Here, neither party invoked Section 19, and so the arbitrators acted within their authority in deciding the Insurers’ indemnification claims. And if that were not enough, there is 

also a waiver problem here. Although FCE eventually objected to the arbitrability of the Insurers’ indemnification 

claims multiple times, it did so only after the panel issued the 

Phase I Award. FCE asserts that this was not too late, because 

Section 31 of the Agreement, “Waiver,” provides that there 

can be no “waiver of any ... right or remedy unless in writing 

and signed by each of the parties.” But it is not clear that this 

language extends to the obligation to arbitrate once a dispute 

is underway and the parties have exchanged numerous written documents. We have held that “[i]f a party willingly and 

without reservation allows an issue to be submitted to arbitration, he cannot await the outcome and then later argue that 
No. 19-2336 13

the arbitrator lacked authority to decide the matter.” AGCO 

Corp. v. Anglin, 216 F.3d 589, 593 (7th Cir. 2000). Moreover, 

this arbitration was to be settled under the commercial rules 

of the American Arbitration Association. Under AAA Rule 7, 

a “party must object to the jurisdiction of the arbitrator or to 

the arbitrability of a claim or counterclaim no later than the 

filing of the answering statement to the claim or counterclaim 

that gives rise to the objection.” FCE did not do so. For all 

these reasons, therefore, we conclude that the arbitrators 

acted within their authority in deciding the indemnification 

claims. 

C 

FCE finally contends that the district court erred in confirming the Phase I Award because the arbitration panel exceeded its authority under 9 U.S.C. § 10(a)(4) by awarding 

damages for “Embezzlement.” Under the Agreement, FCE 

was to receive as an administrative fee a percentage of gross 

collected premiums. FCE took a 5.55% administrative fee, but 

the Insurers claimed that the agreed percentage was 4.3%. The 

arbitral panel agreed with the Insurers. It calculated the difference between the fee FCE took and the fee to which it was 

entitled and awarded the Insurers $550,000. On Exhibit A, the 

panel labeled this award “Embezzlement.” 

FCE argues that the panel did not have the authority to 

make this decision. The panel’s authority, FCE emphasizes, 

extended only to disputes “which arise[] under this Agreement.” FCE contends that embezzlement—a crime—does not 

arise under the Agreement and is therefore not a claim upon 

which the arbitrators were authorized to award damages. 
14 No. 19-2336 

Although the panel used the term “embezzlement,” it was 

nothing more than purple prose. The panel did not (and could 

not) make a conclusive finding about a crime; it merely determined the proper administrative fee. Thus, the claim arose 

under the Agreement and the arbitrators acted within their 

authority. See Hill v. Norfolk & W. Ry. Co., 814 F.2d 1192, 1194–

95 (7th Cir. 1987) (“[T]he question for decision by a federal 

court asked to set aside an arbitration award ... is not whether 

the arbitrator or arbitrators erred in interpreting the contract; 

it is not whether they clearly erred in interpreting the contract; 

it is not whether they grossly erred in interpreting the contract; it is whether they interpreted the contract.”).

FCE also asserts that the award for “embezzlement” violated its due process rights. It rests this argument on the fact 

that the Insurers never pleaded a claim for embezzlement, 

and so no such claim was litigated in the arbitration. It was 

not until the Insurers’ closing argument, FCE contends, that 

the Insurers argued that they were pursuing the claim as one 

for “embezzlement.” 

Despite the dramatic label, the “embezzlement” claim was 

the garden-variety assertion that FCE took excessive and unearned administrative fees from the Insurers. FCE had notice 

of and attempted to defend against this assertion in Phase I of 

the arbitration. Although the Insurers admit to using the 

word “embezzlement” in their closing argument, they emphasize that the underlying claim did not change; they were 

simply using the term because an arbitrator had used it. 

None of FCE’s arguments persuades us that the district 

court should have set aside either part of the arbitral awards, 

and so we AFFIRM its judgment.