The arbitrator, supposedly a neutral third party, found in favor of the HMO last year. Alexander complained to the California court of appeals that the arbitrator showed bias against her and wrongfully limited the discovery process. But the court ruled that it didn’t matter whether or not the arbitrator made “an erroneous decision.” The mandatory arbitration clause in her health plan made the arbitrator’s ruling final.

The issue of whether patients like Alexander ought to be able to sue their managed health care plans or be forced to settle disputes in arbitration is at the center of the battle over the so-called “patients’ bill of rights.” This month, a House-Senate conference will try to reconcile competing versions of the bill. Partisanship may get in the way of a deal. But because Republicans and Democrats at least now agree that patients ought to be able to sue their health plans, everyone now assumes any compromise reached will surely give patients that right.

But everyone is wrong. Arbitration clauses, like the one that Alexander unknowingly signed, are already embedded in scores of health plans. If the conference bill doesn’t make them illegal—and the betting is it won’t—then such clauses will spread like computer viruses to thousands of other health plans, denying members the right to sue as a condition of receiving coverage, and undermining the protections Congress intends to enshrine.

That’s just the tip of the iceberg. Mandatory arbitration clauses now show up in just about any contract the average person is likely to sign. Have you bought a new TV recently, purchased a home, or taken a new job? Better check the fine print of your service contract, closing papers, or employee manual. You may already have given up your right to sue for damages if your TV set blows up, your roof collapses, or your boss sexually harasses you.

Of course, there is plenty wrong with the litigation system and the sometimes hair-trigger willingness of Americans to sue. There’s also much to be said for arbitration. Done right, it can provide speedy relief to the aggrieved, without lawyers raking off half the proceeds. And arbitration clears up our overburdened court system. But arbitration tends to work only when both parties enter into it voluntarily, or when a judge, having reviewed the case, mandates it. Either way, parties have access to the judicial system if arbitration breaks down.

What’s new and insidious about mandatory arbitration clauses is that they block off all access to the courts, even before disputes arise. In doing so, they create all kinds of perverse protections for corporations bent on screwing the average person.

Binding arbitration is nothing new. The practice dates to the 15th century and, at this nation’s founding, mandatory arbitration clauses were already common to business transactions despite Thomas Jefferson’s and other founding fathers’ disdain for them. The 1925 Federal Arbitration Act limited the legal use of mandatory arbitration clauses to maritime and commercial trade employment contracts. But in 1985, the U.S. Supreme Court ruled that such clauses were enforceable in other kinds of employment contracts. That broke the dam, and soon courts were allowing other industries to take advantage of mandatory arbitration clauses.

But the practice didn’t spread like wildfire until 1994 when the American Arbitration Association (AAA), the nation’s largest group of experts who hear and resolve disputes for a fee, came up with a seemingly small but crucial marketing change: It dropped its longstanding policy of providing the first day of arbitration free of charge. Almost overnight, arbitration became relatively more attractive to corporations, who could readily absorb the costs, than to individuals. Corporations began to understand that the number of claims against them would drop if they moved disputes away from the courts, where lawyers often represent clients on a contingency-fee basis, to arbitration.

The boom was on. Corporations began including mandatory arbitration clauses in their contracts. For example, most major credit-card companies routinely insert them in their contracts, which you’ll probably learn if you ever try to take your credit-card company to court. Unions, which represent about one in 10 private-sector employees, have mostly kept mandatory arbitration clauses out of their employment contracts. But for most consumers and working stiffs, mandatory arbitration clauses are fast becoming a fact of life.

In practice, these clauses mean that if you’re sold a lemon, sexually harassed, or denied coverage for life-saving surgery, you may have to cough up $500 to $5,000 just to see an arbitrator, who typically charges $250-an-hour and up after that. And sometimes, three-member panels are mandated. By the time you throw in the cost of depositions, expert witnesses, and attorneys, the cost can rival that of litigation.

The high cost of arbitration played its part in the case of Eric Baker, a one-time Waffle House cook at a South Carolina franchise. The $5.50-an-hour grill operator was fired after he had a seizure. Baker didn’t pursue arbitration in part because the anticipated cost (several thousand dollars) amounted to more than he could save from his salary in two years. Like some 80,000 other disgruntled Americans workers that year, he filed a complaint with the Equal Employment Opportunity Commission (EEOC), the federal agency charged with enforcing discrimination law. His proved one of the lucky 400 cases EEOC picked to pursue in court. But the conservative Fourth Circuit Court of Appeals ruled the EEOC couldn’t recover damages for Baker because he had agreed before his hiring to settle any arising conflicts by arbitration. This fall, the Supreme Court will hear the case to decide whether mandatory arbitration clauses indeed override the powers of EEOC.

One of the benefits of arbitration is swiftness. Disputes can often be resolved in months or weeks—even days—instead of taking years in the courtroom. But the swiftness of the process can also make it easier for corporations to game the system, by dragging their heels on discovery until the clock runs out on plaintiffs. Hiram Ash, a California paralegal who had a mandatory arbitration clause in his health plan, says his HMO improperly denied him emergency pain treatment for severe kidney stones. After five months of prodding Kaiser Permanente, he received only a single document from the HMO. And Ash contends the arbitrator closed the discovery period before completion to go on vacation. In late July, the arbitrator awarded Ash damages of $2,700—not enough to cover one expert witness, much less compensation for his suffering—and it was tens of thousands less than a jury might have. Ash, who alleges the arbitrator communicated inappropriately with Kaiser in his absence, is petitioning the court to have his case rearbitrated. A Kaiser spokesman says that the arbitration process was “fair to both sides.”

Arbitration clauses often compound the unfairness of high up-front costs by severely limiting damage awards. Besides the slim shot at finishing ahead financially—you’re seldom allowed to recoup attorneys’ fees or the cost of arbitration—such limits make finding a savvy lawyer next to impossible. Consider that Ash, who worked in the legal profession, approached more than 20 attorneys for representation, each of whom declined. A lawyer friend only agreed to help him after he took Ash’s deposition as a courtesy and learned what Ash had suffered at the hands of his HMO.

Once you get to the arbitrating table, the promise of neutrality can prove pure chicanery. Many companies restrict the list from which an arbitrator may be chosen. Naturally, an arbitrator repeatedly chosen by a company for highly paid procedures might develop a soft spot for the institution and an indifference toward an individual he might see only once. Independent arbitrators are unlikely to get repeat business if they regularly rule against a company. In many smaller cities and rural areas, the only arbitrators are lawyers who have spent their careers defending the very corporations over which they’re now expected to pass judgment. Moreover, arbitration panels—let alone single arbitrators—typically lack the diversity of a jury, often skewing outcomes if favor of the HMO. Data recently made public by an Alabama court revealed that the Delaware-based credit-card company First USA, which is owned by Bank One, won 99.6 percent of its consumer arbitrations.

Appeals are tough to come by. Under federal law, arbitrators are not regulated. Though many are retired judges or lawyers, they usually don’t need to be credentialed or trained. (Michigan is an exception; Minnesota and Texas are looking into establishing standards.)

In the wake of criticism, groups like AAA have introduced and refined minimum standards of fairness for claims in recent years. Arbitrators who belong to these groups are now free to decline a case in which the arbitration terms are skewed too heavily in favor of a large corporation. But none of the organizations has a surefire way to enforce such codes. And perhaps most telling: Neither AAA nor its major competitor, Judicial Arbitration and Mediation Services, would provide hard statistics on the totality of outcomes.

Corporations like to claim that arbitrators’ offices are better places to settle disputes than courtrooms. In many cases, that’s true. It’s funny, though, how often CEOs exempt themselves from the same mandatory arbitration clauses they impose on their employees and customers. For example, while most Household International consumer-loan customers are bound by such clauses, the Household’s CEO, William Aldinger had his lawyer exempt him from such clauses in his employment contract, according to the Securities and Exchanges Commission data. (Aldinger didn’t return calls to explain.)

Advocates of arbitration often note that arbitration preserves citizens’ privacy by keeping the proceedings confidential. That’s true too. But closing the process also helps shield corporations from additional liability and accountability. Arbitrators issue decisions on a case-by-case basis irrespective of legal precedents. The process is often kept sealed. Evidence disclosed during arbitration cannot then be used for a similar case or a class- action suit. Arbitration outcomes don’t create a body of legal precedent or enable public scrutiny. Imagine if no one had publicly disclosed the data that revealed a link between car accidents and tread separations in certain Firestone-equipped Ford Explorers. Who knows what arbitration has helped companies conceal?

Moreover, arbitrators don’t have enforcement powers to ensure corporations change their bad habits. Rather than alter their business practices, corporations censured by the courts can simply slip mandatory arbitration clauses into their contracts. WMC Mortgage, for one, added them to its boilerplate lending agreements after settling a suit alleging unfair practices in several contracts. Similarly, ConAgra, a large poultry processor, added arbitration clauses to its contracts after Maryland chicken farmers successfully sued the company in the late ’90s.

Of course, the traditional litigation system has its own shortcomings, like the recent Blockbuster Video class-action settlement that won paltry $18 coupons for individual plaintiffs but millions for their attorneys. Still, punitive damages are often the only real deterrent against corporate transgressions. It is the worst kind of sophistry to pretend that, because the courts are sometimes abused, the average citizen ought to be denied access to them.

Indeed, for all the alarm raised during the patients’ rights debate by President Bush and others about the threat of “frivolous lawsuits,” there’s scant evidence that giving patients the right to sue health plans leads to a glut of litigation. In Texas, despite opposition from then-governor Bush, patients garnered the right to sue in 1997. Less than 20 patients have done so. And so far no suits have been filed in California, where patients have been able to sue since January.

Yet what’s most unfair about mandatory arbitration clauses is that they force employees, patients, and consumers to surrender their rights before a dispute arises. That’s like inviting your boss to abuse you, your doctor to deny you care, and your car dealer to sell you a clunker. Shouldn’t consumers be able to choose how they want their dispute settled after a problem arises? Even the loudest critics of mandatory clauses acknowledge that voluntary arbitration or mediation can offer better, faster, and cheaper solutions than litigation. But democracy is all about choice. And it’s hard to argue that mandatory arbitration clauses are a form of choice, especially when health-care plans are typically chosen by employers. How many of us really have the ability to turn down a job simply because there’s a mandatory arbitration clause in the company’s health plan? For now, the best most consumers can do is to try to negotiate such clauses out of their contracts.

Mandatory arbitration clauses may indeed work in a parallel universe, but here in the United States there is already a system in place to handle such disputes: It’s called the civil justice system.

Julie Wakefield is a Washington writer.