News releases by the Interstate Commerce Commission are not usually astonishing. But one five-page release from the ICC’s regional office in Chicago is a real eye-catcher. It reminds one of the TV commercial’s refrain: “Pass it on, pass it on.”
The ICC filed suit against 12 large Midwestern trucking companies for illegally keeping over $2.3 million that should have been returned “to shippers who had inadvertently paid their transportation bills twice.” The ICC says that the trucking companies were “well aware of what were duplicate freight bill payments, but had made no effort to return the money.” ICC’s chief investigator, Ivan Schaeffer, said that the actions of the companies “could prove to be the tip of a very expensive iceberg which hurts shippers who lose the use of their capital and injures consumers who ultimately share in the double payments through higher prices for merchandise.”
It is rather astonishing that companies would issue duplicate bills regularly and retain the money as the ICC claims. But far more amazing is the practice by the shippers of paying the same bill twice! Assuming the absence of a kickback scheme by embezzlers inside the shipping companies, what could be the reason for this masochistic negligence?
ONE VETERAN ACCOUNTANT I spoke with called the problem one of “inadequate internal
control by the purchasers over their negligent employees.” That certainly seems true enough. The ICC’s Schaeffer expressed concern that even large national companies who shipped and paid twice were “unaware of the double payments in this age of computerized bookkeeping.”
If the government behaved this way, the Wall Street Journal would have an editorial field day. In this ICC case, these episodes — possibly the tip of the iceberg occurred within allegedly cost-minimizing corporations. Beneath this laxity is a business attitude that can be called the “transfer mentality”: As long as it can be passed on to the final consumer, the necessary corporate alertness deteriorates.
Another side to this “transfer mentality” is the increasing trend toward non-itemized billing. Accountants have informed me that this trend is particularly true among lawyers, physicians, dentists and accountants. To the extent that consumers do not object to this billing practice, the incentive for these professionals to be careful about their costs diminishes. After all, the costs can be transferred without itemization under the category of “services rendered.”
A recent plumbing bill in Washington was sent with the designation “technical service time …$70.” How many hours or what else that represented was not available, even after the customer made a request for Specification.
A RETIRED COUPLE from Homosassa, Fla., complained recently about a large bill which one spouse received after being hospitalized. “All that my wife and I are requesting is an itemized accounting that is correct so that we are not charged for supplies and services not received. But as of this date, the only thing that we have gotten from the hospital in question is a promise to take us to court.
“We think that every person going to a doctor or hospital should ask for and receive an itemized account of everything charged for on their bill!” wrote the Florida couple. They closed their appeal by noting that “the insurance company that is concerned in our case showed very little interest.”
The unwillingness to contain hospital and other medical costs and waste has long plagued Blue Cross and other insurance carriers afflicted with this transfer mentality.
One of the important contributions consumers can make to economic efficiency and a lower inflation spiral is to reject non-itemized or inscrutable bills and the widespread padding and misdeeds they encourage. That holds true for intermediate corporate consumers like the afore-mentioned shipping companies as well as the Main Street consumer who, after all, has to pay all the bills of an increasingly non-itemized economy.