Execs defend Pinnacol’s business practices
By Charles Ashby 
| September 8, 2009 | 7:01 AM
Executives for Pinnacol Assurance drew a line in the sand Friday, telling a legislative panel looking into their activities that the quasi-governmental entity — the state’s insurer of last resort for worker’s compensation insurance — is doing exactly what it should be doing and that any allegations to the contrary are just offensive.
Testifying before the Interim Committee on Issues Related to Pinnacol Assurance, the executives also said that tales the 16-member panel heard last week from injured workers about how their claims were denied were not the complete story for each. But what the rest of those workers’ stories are, they wouldn’t say.
“I’m not going to comment on the merits of an individual claim. It would be inappropriate and illegal for me to do so,” said Ken Ross, president and chief executive officer of Pinnacol and a member of the committee. “But I can tell you there is much more to that story than what we heard testified on Monday. I’ll just leave it at that. I do not believe the committee heard the full story regarding individual claims. I cannot and neither can any of my colleagues talk about any medical conditions regarding a claim that’s been filed by law. It’s not just Pinnacol, it’s all insurance companies.”
The executives — Don M. Collins, vice president of underwriting and chief marketing officer; Robert Norris, vice president of strategic development and chief information officer; and Daniel F. O’Neil, vice president of claims and general counsel — said Pinnacol runs its operation no differently than any other insurance company.
Its use of a sky box at Invesco Field at Mile High, its spending of thousands of dollars at conferences across the nation, and its paying of bonuses to employees for good work are the same business practices used by other companies in the nation, they said.
Additionally, any allegations that Pinnacol operates an adversarial system just aren’t true, O’Neil said. Of the 55,000 claims it processes each year, only a few hundred end up being challenged. Last year, only 23 went so far as ending up in court on allegations of insurance fraud, with 19 of them proved and won, resulting in $130,000 in ordered restitution back to Pinnacol.
Despite the testimony, several members of the committee said they still want to look into some other model for Pinnacol, which was created by state statute in 1915. Those models include completely privatizing the entity, which doesn’t pay any state or federal taxes.
The interim legislative committee initially was formed to question whether Pinnacol was overcharging its customers, underpaying injured workers’ pay and overcompensating its executives.
Pinnacol also has been accused of paying its low-dollar claims but fighting more costly ones, a notion O’Neil said was offensive
“We get 55,000 claims a year, we pay those claims. That’s what we do,” he said. “The thought of saying no we would just deny a high-dollar claim is very offensive. We look at each case on a fact-specific basis, and that’s what we do.”
Earlier in the day, the committee heard about possible alternatives to Pinnacol operating as a quasi-governmental entity, including completely privatizing it as other states have done in recent years.
In addition to a presentation from the Employers Insurance Company of Nevada, which once was operated similarly as Pinnacol, the committee heard from advocates on the insurance and consumer sides of the equation. The panel’s simple question to them: What would privatizing Pinnacol do to the worker’s compensation market in Colorado and, more importantly, to consumers themselves?
Both sides said that would rely greatly on just what Pinnacol would become. While some said they had concerns about how Pinnacol operates now, they would have greater concerns about making any changes to it, depending on what the legislature would do.
pinnacol assurance, politics, worker's compensation insurance
