Colorado Officials Defend Pinnacol Actions

Executives from Colorado’s state-chartered workers’ compensation insurance company defended themselves against accusations of lavish spending and excess profits on Friday and they told lawmakers it would be counterproductive for them to mistreat injured workers to increase profits.

Pinnacol CEO Ken Ross said the company is proud of its record, and said it has become a model for other insurance companies.

“We are absolutely not embarrassed. In fact, we’re very proud of the success that Pinnacol has realized for the state of Colorado. We are very proud that we have a very viable, stable, competitive system in Colorado,” he told a legislative committee studying potential changes to the company.

Ross defended huge salaries and bonuses for himself and his employees, including thousands of dollars spent on lavish entertainment, including $1,500 for one night at the Mirage in Las Vegas. Ross said he was entertaining other insurance executives and it helped him recruit top talent.

Dan O’Neill, vice president of claims, acknowledged that claims adjusters and medical advisers receive bonuses based on profit and other performance standards, but he said it would be counterproductive to deny claims to improve profit margins because customers would leave.

The company also admitted it spied on about 2,600 injured workers last year who have pending claims, but officials said they are required by law to do it to prevent fraud.

Mark Simon, an injured worker serving on the panel, said the money spent on employee perks and entertainment could be used to help thousands of injured workers in Colorado that have their claims denied every year.

Ross told legislators he didn’t know how many of the approximately 55,000 claims filed with Pinnacol each year are denied, but company officials told lawmakers it is only a small percentage.

The committee was formed after lawmakers considered but ultimately rejected taking the company’s $684 million surplus to help balance the state’s budget. Pinnacol says its surplus is now $580 million because it again refunded more money to its policyholders this year.

Lawmakers said the surplus may have come at the expense of injured workers who had their claims denied.

On Monday, a dozen workers injured on the job told lawmakers they were spied upon and their claims were unfairly denied. Witnesses included a former Durango firefighter who was injured in training who told legislators he was forced to sell his home after Pinnacol denied him the surgery he needed to fix his back, and a former union worker who said nurses were sent with him on doctor visits to spy on him.

The committee is looking at whether the company should have more state oversight or whether it should be sold off. But since Pinnacol is a hybrid of public and private, it’s unclear whether lawmakers have the right to sell it.