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Case study: Look closely at consultants’ motives

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in Employee Benefits Program,HR Management,Human Resources

The Texas Insurance Commission filed charges against consulting giant Mercer HR Consulting and its client, the Houston Independent School District, claiming the company had charged the school district $20 million since 2000 and then gave the district more than $800,000 in rebates.

That may be an illegal sales practice under Texas law, which prohibits insurance-agent rebates as an incentive to entice customers into buying insurance policies. The insurance commission also charged that Mercer told other school districts to pay a fee to join an insurance consortium as a way to save money, while no savings were actually available under the plan.

Tip: When you outsource HR and benefits administration, look closely at the deal, and ask whether the consultants also benefit from any insurance coverage they recommend. In Mercer's case, other lawsuits allege the company took consulting fees from school districts and payments from insurance companies it recommended.  

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