Embattled Pinnacol Assurance Board Member Off Board

Debra Lovejoy Attended Lavish Pebble Beach Trip

The embattled former chair of the ethics committee of Pinnacol Assurance is no longer on the firm's board of directors.

Debra Lovejoy's most recent 5-year term has come to an end and someone else has been appointed in her place. The move follows a CALL7 Investigation into a controversial trip to Pebble Beach that Lovejoy attended.

Her exit from the board happened in the final days of Gov. Bill Ritter's term, but was not announced by his office or Pinnacol Assurance.

Blair Richardson of Denver is now serving in Lovejoy's place as an interim board member. A spokesperson for Gov. John Hickenlooper told 7NEWS that Hickenlooper will reaffirm the appointment.

7NEWS' hidden cameras captured Lovejoy and two other Pinnacol Assurance board members enjoying the lavish trip to the California resort back in May 2010.

Receipts show Lovejoy, who was the ethics chair of the Pinnacol board in May 2010, received more than $6,000 in spa treatments, golf, airfare, hotel rooms, liquor, five-star dining and gifts. (See some of Lovejoy's receipts.)

The trip, first reported by CALL7 Investigator Tony Kovaleski, cost $318,000 and was billed as an "agent incentive" event by Pinnacol executives. However, records show the firm's contract agents made up less than half the 40-plus person guest list.

Pinnacol Assurance is defined by state statute as a "political subdivision of the state." It's the same definition used to describe entities such as the University of Colorado. As such, the firm pays no taxes and its employees are eligible to receive benefits from the Public Employees' Retirement Association of Colorado, or PERA.

The same statute also directs Pinnacol to operate as a "private mutual insurance company" and the insurer of "last resort" for businesses in Colorado.

The board of directors of Pinnacol is appointed by the governor to oversee the firm's operations.

Several state lawmakers, including the President of the State Senate and the House Minority Leader, questioned the objectivity of the three board members who accepted the all-expense paid trip to Pebble Beach, and called for each to step down.

When told by Kovaleski about Lovejoy's exit, Senate President Brandon Shaffer, D-Longmont, said, "It's a step in the right direction."

"I think it's appropriate. I think it’s long overdue and she is probably not the only member of the board that has been compromised because of some of these other gifts and trips and expenses and so forth," said State Sen. Morgan Carroll D-Aurora. "I think it’s a good start. I think there is more housecleaning that needs to be done."

"Board members taking this kind of travel and entertainment, ethical or not ethical?" Kovaleski asked University of Denver professor Jim O'Toole in January.

"From the point of view of an ethicist, I would think what they did does not pass the test of reasonable behavior or reasonable expense, particularly given that this is a quasi-public organization," said O'Toole.

O'Toole has experience working with and consulting for boards of both commercial businesses and nonprofit entities.

"What is implicit in all of this is there is some sort of back-scratching going on," said O'Toole.

Board president Gary Johnson and audit committee chair Ryan Hettich both attended Wednesday's meeting at Pinnacol headquarters. Lovejoy, who was the board's head of ethics at the time of the Pebble Beach trip, was not at the Wednesday meeting.

Lovejoy joined the board in 2003 for an abbreviated term that ended in 2006. She was re-appointed in 2006 for a 5-year term. Past entries on the Pinnacol website said Lovejoy "is vice president of Employer's Resources of Colorado, Inc., which provides outsourced human resources services to Colorado businesses."

Earlier this week, CALL7 Investigators also learned that Pinnacol has canceled its contract with the state, notifying the Department of Personnel Administration that it will no longer administer the state’s worker’s compensation program.

A letter was sent to the state just hours after 7NEWS reported the total cost of the Pebble Beach trip.

The state is self-insured but it pays Pinnacol more than $1 million a year to administer the claims.

“Pinnacol Assurance has been examining our Third Party Administration (TPA) services and, after much deliberation, we have decided to discontinue our entire TPA product line,” Pinnacol wrote in a letter obtained from the state. “Our decision was a difficult one because it requires that Pinnacol Assurance terminate our long-standing and valued relationship with the State of Colorado and our other TPA clients.”

The state will have to put out a request for proposal to find a new administrator for the contract earlier than planned.

Calls to Lovejoy have not been returned.

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