Lawmakers Outraged By Pinnacol Trip

CALL7 Investigation Prompts Bipartisan Calls Of Board Member Resignations

Gov. Bill Ritter called a trip by three Pinnacol Assurance board members “ill-advised,” and there is now a bipartisan call for board resignations after a CALL7 investigation exposed a five-day luxury trip by Pinnacol staff and members of the governor-appointed board.

CALL7 Investigator Tony Kovaleski followed Pinnacol board members to Pebble Beach in mid-May, showing them accepting pricey golf fees, expensive rooms and luxury food and drinks apparently at Pinnacol’s expense.

After reviewing the hidden-camera video, Sen. Morgan Carroll, who headed a committee looking into Pinnacol business practices last year, called for board Chairman Gary Johnson and board members Debra Lovejoy and Ryan Hettich to resign after taking the trip, saying it violated their independence as an oversight board. Sen. Scott Renfroe, R-Greeley, in a phone interview also said the board members who went on a trip need to resign.

Ritter issued a statement Wednesday afternoon, saying Pinnacol violated a high standard that they need to keep. Ritter declined to appear on camera.

“I have made clear to Pinnacol that I expect better judgment in the future,” the statement said.

The governor staff is communicating with Pinnacol management, is researching the issue and considering all options available. State statute may not allow the governor to remove board members after they were approved by the full Senate.

Other members of the judiciary committee, which approved Ritter’s reappointment of Johnson and Hettich, also were outraged by the trip and the reaction of Pinnacol Chief Executive Officer Ken Ross.

“I’m very disappointed that the Pinnacol board chose to behave like they did, particularly coming off the heels of the legislative session we have just been through,” said Sen. Pat Steadman, D-Denver.

Steadman said he was also surprised that Ross would be so upset about cameras capturing his golf outing when Pinnacol private investigators use hidden cameras to try to track people on worker’s compensation when Pinnacol believes are faking injuries. He pointed out Pinnacol opposed a bill that would have limited their use of tracking workers with cameras.

“It seems it’s okay for them to behave that way and send private investigators and cameras out following injured workers -- watching them take out their trash or do whatever it is they catch them doing on film -- but when the cameras are turned on them, they sure don’t seem to like it very much,” he said.

Sen. Evie Hudak, D- Westminster, said she wasn’t surprised by the outing because Pinnacol representatives were “arrogant” when dealing with legislators.

“I think it’s reprehensible the way that they behaved,” she said. “I think (Ross) hasn’t learned his lesson yet. I think we need to look at more ways to take control. Obviously, they are not using their own power appropriately.”

“Based on what you saw last night, do you question the independence of these three board members?” Kovaleski asked.

“Yes, I do,” Hudak said.

Sen. Linda Newell, D-Littleton, agreed that the three board members cannot be independent and still accept golf and take expensive trips from the people they are supposed to oversee.

“I have never seen a CEO respond that way or hobnob that way with his own board in such a blatant way,” she said. “I would like to see more independence.”

She said she was also upset at the way Ross reacted.

“I have never seen a CEO respond that way,” she said. “I have never seen a CEO react that way or try to push somebody out of the way physically. To me, that’s embarrassing.”

Pinnacol is the state-started worker’s compensation company that qualifies for such government-like benefits as tax-free status and a generous government retirement program. Yet, Ross says Pinnacol is a mutual insurance company and therefore can abide by different rules than state agencies.

CALL7 Investigators followed Pinnacol staff out to California and the luxurious Pebble Beach golf resort. We found Pinnacol board members, who are supposed to oversee Ross and the company, on a trip that apparently cost tens of thousands of Pinnacol's money on an excursion.

The video shows three Pinnacol board members – Board President Gary Johnson, ethics member Debra Lovejoy and board member Ryan Hettich – golfing at $495 a round, staying in rooms that the hotel says start at $695 a night and enjoying dinner and cocktail parties. Johnson brought his wife and Lovejoy was joined by her fiancée.

The Pinnacol outing also included a chartered bus for a wine tour in nearby Carmel wine country.

Carroll called the trip “ridiculous” and “obscene.”

“When you realize that they are stewards of the public money,” Carroll said. “This is a quasi-public entity we are talking about here. I think it’s ridiculous.

“The board is supposed to be the oversight check and balance,” she added. “It is uncomfortable to me that there’s a large amount of wining and dining.”

A CALL7 investigation last year showed Pinnacol spending tens of thousands of dollars on golf outings, dinner with plenty of liquor and expensive hotels. The investigation also questioned the salary of Ross and other top executives -- pay the state auditor has said is out of line with similar agencies.

For that investigation, Pinnacol provided records under the Colorado Open Records Act, but when 7News asked for records on this month’s Pebble Beach trip the request was declined and Pinnacol asked a judge to sanctify its decision to not provide records.

Since CALL7 investigators could not review receipts of the trip, it is unclear how much the outing cost and if any portions were paid for by board members. But previous trips have come out of the Pinnacol coffers, and undercover reporting indicated that Pinnacol paid key parts of this trip.

In a phone call to the resort hotel, the clerk said 28 rooms were on the Pinnacol account. A brochure says rooms range from $695 to as much as $2,200 for suites. And a clerk at the pro shop said the greens fees were on the Pinnacol “master account.” Rounds of golf at Pebble beach are $495 a person, plus costs for caddies and gratuity, the clerk said.

"So no one's paying separately?" Kovaleski asked.

"Correct," the clerk said.

Board members, including the three who went to Pebble Beach, approve salary and large bonuses for Ross and other executives and weighed in on the company’s travel policy.

In an interview last year, Ross said he does not make enough money, saying a review by the legislature and an attempt by lawmakers to take some of Pinnacol’s profits were a heavy burden.

“I am actually going to go to the board after what I went through the last two months, I think they ought to give me a raise,” Ross told CALL7 Investigator Tony Kovaleski in 2009.

Following a golf round on May 13, Kovaleski asked Johnson about whether it was appropriate for him to be on the trip.

“What do you think the governor is going to think about you taking this kind of golf with you and your wife,” Kovaleski was asking Johnson when Ross interrupted and prevented the board member from answering.

Ross, on the 18th hole, seemed very agitated.

“You point your finger at me again, and I’m going to break it,” Ross said while pointing his finger at Kovaleski. He turned to the camera and demanded that it be turned off.

“This has nothing to do with Pinnacol,” Ross said.

“It doesn’t?” Kovaleski asked. “Then why did your employees let us know you were here? Why are your employees outraged? You are spending a lot of money on a trip and you have board members who are appointed by the governor.”

CALL7 Investigators were tipped of to the trip by a source who had information from inside Pinnacol.

Ross, who was being restrained by colleagues, surged at Kovaleski.

“Please, don’t push me,” Kovaleski said.

Carroll said Ross had a duty to answer legitimate questions about the trip and ethics of taking board members and their spouses and friends.

“If he reacts like this when you question him, how do you think he is going to react when his board or his employees question his practices?” Carroll said.

In a previous interview, Johnson told Kovaleski that the Pinnacol board was “very independent.” But when Kovaleski asked for interviews with Johnson, Lovejoy and Hettich upon returning from the golf trip, a Pinnacol spokeswoman responded by e-mail, writing “we will not be making these individuals available for an interview.”

We also attempted to contact the three board members individually by phone and email, but they did not respond to our requests.

After watching our undercover video, Carroll said Pinnacol needs new leadership in the executive offices and on the board.

“Should the board members resign if they were on this trip?” Kovaleski asked.

“I think they should,” Carroll said.

Carroll also said her committee heard from workers compensation patients who could not get Pinnacol to pay their medical bills, including a widow whose husband had to fight Pinnacol for a wheelchair.

“For that widow, what is she supposed to think when she sees that people are spending more money on cocktails in just a few minutes than what it would have cost to provide a wheelchair for her quadriplegic husband," Carroll said.