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Worker’s Compensation carrier Pinnacol Colorado

This article was on 9news in Denver.

DENVER – Gov. Bill Ritter says travel records released and reviewed by 9Wants to Know Thursday that show three Pinnacol Assurance board members, executives, employees and spouses spent $318,717 golfing, dining and drinking during a trip at a luxury resort last year on the firm’s dime demonstrate “extremely poor judgment” and taxpayers “deserve better.”

“The trip to California and its exorbitant price tag demonstrate extremely poor judgment on the part of Pinnacol’s leaders at a time when their customers – small businesses and workers alike – are suffering through the worst economy in generations. As a quasi-governmental agency with an obligation to respect and honor Colorado taxpayers, we deserve better. At the very least, we deserve more responsible leadership,” Ritter said in a statement to 9Wants to Know.

Colorado’s employers are mandated to pay into the state’s workers’ compensation fund which is managed by Pinnacol. Pinnacol’s board is appointed by the governor.

Meanwhile, two lawmakers say they want the head of Pinnacol to resign based on these expenditures. The expenses were at the Lodge at Pebble Beach outside of San Francisco on May 12 through May 16.

“The amount of money spent is grotesque. It is an abuse of trust both for the employers and for the injured workers who actually think the money is going to get them rehabilitated and back to work,” Sen. Morgan Carroll (D-Arapahoe County) said. “I find it incredibly insensitive for the actual purpose of what this organization is supposed to do.”

Carroll, who is the senate majority caucus chair, thinks it’s time for Pinnacol Chief Executive Ken Ross to resign. Carroll said there’s a structural lack of oversight by the board. Board Chairman Gary Johnson and board members Debra Lovejoy and Ryan Hettich also went on the junket.

“These people have too close of a conflict of interest and they ought to recues themselves and step down. They need to step down,” Carroll said.

Rep. Sal Pace (D-Pueblo) agrees that Ross should consider quitting in light of these new spending records and past audits that show Pinnacol overcharged businesses and granted executives huge bonuses.

“We need someone running the organization who is concerned about protecting small businesses, not growing their empire,” Pace said. “For Pinnacol to take people’s money and spend it in this manner is completely wrong. It’s disgusting.”

Costs included $15,000 in airfare, $39,659 in golf and spa services, $131,000 in room charges, recreation and room charges for the delegates, $46,259 for restaurants and lounges and $35,800 in retail, transportation and miscellaneous charges and $8,091 in tours and dining charges.

At the Casanova restaurant on May 14, guests spent $1,795 on bottles of wine, filet mignon and Jack Daniels. At one airport lounge, the travelers spent $431 just on drinks, including vodka, rum, Baileys, Bud Light and Crown Royal.

Pinnacol spent $325 on pink golf balls for the lady golfers. The golfers paid $260 in green fees. When four golfers were no-shows at tee-time, Pinnacol paid $1,040 in penalties.

Nearly every single person who attended the junket received hundreds of dollars worth of spa treatments including 80-minute men’s facials, 80-minute lavender pedicures, 70-minute pebble massages, 50-minute sports pedicure, and 50-minute targeted massages with back revitalizers. Employee Jennie Miller got her hair colored, cut and blow-dried for $180.

At the Whaling Station restaurant, the vacationers spent $1,557 on drinks and a three-course menu. At other restaurants, they dined on lamb, rare ahi tuna, sushi, lobster, crab, escargot, butterfish and more booze. Ross and the others drank $88 in bottles of wine, $45 in champagne and $13 in cognac.

Ross’ hotel room charges alone cost $7,649. One breakfast buffet cost $63 a person. It cost Pinnacol $4,057 on May 13. Dinner at Cub XIX cost $19,120 and included seven bottles of chardonnay for $100 each, 88 liquor drinks and eight beers.

Pinnacol also spent $6,000 for $250 gift cards to the lodge for its guests.

Seventeen board members or agents and many of their spouses attended the five-day wine and golf trip to Pebble Beach in May 2010.

Pinnacol Assurance said it released the records Thursday to comply with a court order directing the documents be delivered to KMGH-TV and made public.

“Pinnacol sought guidance from the court regarding this request because, under its existing statutory framework, the company, although a political subdivision of the state of Colorado, is directed to operate as a private mutual insurance company,” it said.

The company said it intends to proceed with its appeal of the trial court’s reasoning that forced the company to make the spending documents public.

“Pinnacol is committed to being transparent in its business operations and while we have complied with the trial court’s order to release the information, we continue to believe that the balance between transparency and the company’s mandate to operate as a domestic mutual insurance company is an important question that should be determined by Colorado appellate courts,” the statement said.

The nine-member board of directors is appointed by the governor and oversees the operations of Pinnacol. Employee representative Lovejoy serves on the board governance and ethics committee.

Second Judicial District Court Judge Morris B. Hoffman issued his order Dec. 3, 2010. Pinnacol fought to keep the expense reports private claiming it is exempt from public records laws. But the court ruled that the workers’ compensation insurance carrier is a political subdivision of the state and must release the records.

State auditors criticized the insurance company for its lavish spending history in September, which prompted Pinnacol to stop paying for state-appointed board members and their spouses to go on vacation with Pinnacol employees at luxury resorts.

Pinnacol is the state’s largest workers’ compensation insurer with 55,000 policyholders and is considered the state’s carrier of last resort.

According to its website, policyholders have shared $394 million worth of general dividends six years in a row. Since Pinnacol is a quasi-public entity, it gets tax breaks that other carriers are not afforded.
We can only hope this effects their “quasi” status.

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