Patsy Bates never thought her battle with cancer would lead to a groundbreaking arbitration decision that awarded her $9.3 million.

“I was David, and they were Goliath. And I won,” says Bates, referring to her unlikely victory against Health Net Inc., one of California’s largest insurers.

The 52-year-old hairdresser from Lakewood, Calif., was undergoing chemotherapy treatments for breast cancer in late 2003 when Health Net began to question the validity of her policy.

Claiming that Bates had failed to disclose a heart condition and had listed the wrong weight on her application, the company canceled her policy. A Health Net broker had completed the application for Bates; he later changed her reported weight from 185 pounds to 165. The company rescinded her policy in January 2004, saying that Bates should have been denied coverage based on her actual weight.

In California, a policy can be rescinded if an applicant willfully misrepresents information. But arbitration judge Sam Cianchetti ruled in February that Bates hadn’t done that, and that the insurer had acted improperly and failed to “satisfy the obligation of good faith and fair dealing.”

Health Net says it will review its application process and implement an external third-party review process before rescinding future policies.