The way I interpret it, if you were a company, which would you hire - an H1B who worked that way but you paid only for 40, or a U.S. worker who expected to be compensated accordingly?
Evidently those outfits (in Texas, in the '90s) were doing that to capture the market. It was no skin off their nose if they worked their people ragged - there was always more coming in.
I always made a point to tell those guys what I made in the hope I could stir up some trouble. Dunno how successful I was as they told me they were trapped - the Mother Ship kept all their papers so they couldn't work anywhere else.
My point was that the company doesn't really come out ahead at all if they work the guy for 80-90 hours per week but only bill the client for 40 hours. If that's the case, then why not have him work 80 hours and then bill two different clients for 40 hours each? The cost to the company would be the same, and the revenue would be doubled.
Maybe I'm just missing something here ... or maybe there are some important details that aren't included in the post I was citing.