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January 10, 2011 11:06 PM UTC

Ken Ross' Time Finally Up?

  • by: Colorado Pols

Investigative journalists at 9NEWS have unleashed a fresh round of disclosures of lavish, questionable spending by state-chartered worker’s compensation insurer Pinnacol Assurance; and this time, Pinnacol CEO Ken Ross might not outlast the controversy.

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.”

…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.

Followed up a day later by even more bizarre, wasteful Pinnacol perks:

More than 100 of Pinnacol’s employees have learned to cook at Mise en Place, at a cost of more than $10,000, in the last year.

Another private class led by a chef is planned for Pinnacol employees next week at Mise en Place in Denver, according to the school’s website.

That’s left a bad taste in some lawmaker’s mouths…

Last May, we noted the original report from 7NEWS about PInnacol’s Pebble Beach junket, memorable above all for Ken Ross’ violent on-camera meltdown when confronted by 7NEWS’ Tony Kovaleski–an out-of-control Ross had to be restrained and led away from the scene by his subordinates. He was really angry that his honor was being questioned; not very different from his attitude testifying about Pinnacol’s outsized reserves and business practices as a state entity, where he enjoyed a solid wall of bellicose GOP support.

We’d expect the next hearings to be, uh, a little more contrite, assuming the man keeps his job. And that reminds us–don’t we still have a massive budget shortfall to close, just like 2009? We know some holes in the budget that could be filled with a few hundred million in Pinnacol’s excess reserves: otherwise known as state funds that could be, well, rather obviously better spent. We can’t see any possible way that the legislature could allow Ross to continue here.


12 thoughts on “Ken Ross’ Time Finally Up?

  1. I thought you guys had abandoned the Pinnacle raid, on account of how socialistic it was.

    Do you think Hickenlooper will stand by while you steal hundreds of millions of dollars from Colorado business?

    1. Considering that Colorado pretty much owns the company and appoints its Board of Directors, it is hardly theft.

      Pinnacol is not a mutual insurance company (aka cooperative aka commune), even though it has strived to keep rates at close to cost, and either way, as a government owned entity, or a commune, it is still not a for profit enterprise and was premature to think that it could act like one.

  2. The “let’em eat cake” crowd at Pinnacol has stunk up the place long enough.

    I was at some of the Pinnacol Interim Committee hearings and listened to Ross and his cohorts break their arms patting themselves on the back on what a spectacular job they had done and their contributions to charity.

    Funny, didn’t hear anything from Ross et al about their extravagant junkets and gourmet cooking classes.

    Have you ever walked into a room, flipped on the light, and watched the cockroaches head for the cracks?

  3. in my opinion.  Lavish trips as perks to top performing sales staff really aren’t all that exceptional in the insurance industry.  CEOs who can’t keep their cool in press appearances, even surprise ones, are very unusual and a sign that they aren’t up to the job.

  4. The Pinnacol Interim Committee hearings were never about “taking” any of Pinnacol’s money. This was made clear by Chairperson Carroll at the onset of the hearings. But the Republicans on the committee continued to imply it was, and continue to milk this non-issue.  

    The bills voted out of the committee addressed some egregious and questionable policies of Pinnacol like intrusive surveillance, claimant rights in light of denied claims, and the big issue of why Pinnacol was amassing reserves far in excess of industry standards when in fact Pinnacol is statutorily required to refund those excess reserves back to the policy holders.  

    I feel the original bills to “expropriate” $500 million from Pinnacol were bad legislation and a mistake on the part of legislative Democrats that would have been legally indefensible in lawsuits sure to be filed. The bills, passed by both the House and Senate went no further when Ritter let it be known they were unacceptable to him, and he was right.

    This being said, the “culture of perks and privilege” at Pinnacol has to change and it’s clear the only way to do that is by a wholesale management change.  

    1. Pinnacol’s reserves are state funds just as much as any other state agency, and you’re right that they were in excess of their required levels. The legislature had every right to go after those funds to balance the budget, but political posturing from the GOP and Ken Ross simply got the better of Ritter.

      1. C.R.S. 8-45-102(5)

        The moneys in the Pinnacol Assurance fund shall be continuously available for the purposes of this article and shall not be transferred to or revert to the general fund of the state at the end of any fiscal year. All revenues, moneys, and assets of Pinnacol Assurance belong solely to Pinnacol Assurance. The state of Colorado has no claim to nor any interest in such revenues, moneys, and assets and shall not borrow, appropriate, or direct payments from such revenues, moneys, and assets for any purpose.

        The legislation passed by the House and Senate struck this statue and said the money could be transferred to the general fund.

        The problem is insurance is a contract between the insurer (in this case Pinnacol) and the insured (the policy holders).

        C.R.S 8-45-112

        The board may amend at any time the rates for any class. No contract of insurance between Pinnacol Assurance and any employer shall be in effect until a policy or binder has been actually issued by the board and the premium therefor paid as and when required by this article. Not less often than once a year the chief executive officer shall tabulate the earned premiums paid by policyholders of Pinnacol Assurance. Should the experience of the Pinnacol Assurance fund show a credit balance and after payment of all amounts that have fallen due because of operating expenses, injury, or death, and after setting aside proper reserves, the board shall distribute such credit balance to the policyholders who have a balance to their credit in proportion to the premium paid and losses incurred by each such policyholder during the preceding insurance period. In the event any such policyholder fails to renew a policy with Pinnacol Assurance for the period following the period in which said dividends were earned, said policyholder shall be entitled to said credit dividend if such policy is terminated in good standing. In the event an employer actually discontinues business, said employer’s policy shall be cancelled, and the dividend, if any, when ascertained, shall be returned to the employer.

        The statue in force is pretty unambiguous that the Pinnacol monies are not to be transferred to the state general fund and that there is a contract between Pinnacol and each policyholder in which it is required by law that funds in excess of prudent reserves are to be refunded to the policy holders.

        If the legislation to expropriate would have become law, there would have been breach of contract lawsuits from policyholders against Pinnacol (which Pinnacol would have to defend while at the same time welcoming them) for the misappropriation of money that policyholders would claim was theirs. This could have been the potential for up to 50,000 breach of contract lawsuits against Pinnacol (most likely certified into a class action). The AG might very well have been tapped to defend that litigation.

        A key issue in litigation may have been the passing of a law which in effect retroactively voided valid contracts. Those contracts were made when when 8-45-102(5) would have been law and considered an integral part of those contracts, hence the legal problem.  

          1. Whether or not that is appropriate is a value question?

            Personally I believe the state should not go after the reserves and Pinnacol should either/both:pay people the benefits they deserve and rebate any remaining back to the policy holders.  Enrichment of the management class of a company designed to be the “insurer of last resort” is wholly inappropriate.

            1. We hear a steady stream from the R’s about cutting government waste and extravagance. Pinnacol is a state quasi- governmental entity, so why aren’t the R’s screaming that Pinnocal be run efficiently?

              If it were revealed the Governor’s Energy Office was paying for gourmet cooking classes and Pebble Beach golf junkets you’d never hear the end of it.

              R’s should be demanding the extravagance and waste at Pinnacol be cut and that Pinnacol comply with the law and refund every dollar that it prudently can back to the 50,000 plus small and medium sized businesses that Pinnacol insures. Cutting taxes and fees so Colorado businesses have more money to invest and thus create jobs has been their mantra – its time to put up or shut up.  

              Why are the R’s then silent on this issue, which would put more money back in the pockets of Colorado small and medium sized businesses to stimulate our state economy, instead of Pinnacol hoarding the money and investing it on Wall St?

              A $500 golf fee spent in California does nothing for the economy of Colorado.  

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