Pinnacol Questions Lobbyist After CALL7 Investigation

Pinnacol Questions Whether It Will Retain Axiom Strategies After Contract Expires

Pinnacol Assurance board members and officials are demanding answers from one of their lobbyists and questioning the veracity of at least one lawmaker after a CALL7 Investigation that asked whether the lobbyist improperly paid for meals to lawmakers or overbilled the quasi-public agency for those expenses.

CALL7 Investigators reported that Axiom Strategies submitted bills to Pinnacol for meals with 16 lawmakers totaling $1,760, and if Axiom paid for the lawmakers' meals it would violate Amendment 41, which prohibits lobbyists from providing anything of value for public officials and employees, ethics experts said.

“If there is an issue with Axiom, I don’t want to retain them,” said Pinnacol Chief Executive Officer Ken Ross.

Ross said he discussed with Axiom about sending an auditor over to the lobbying firm to review the detailed receipts for those meetings to determine whether the lobbyist improperly paid for the meals with lawmakers or billed Pinnacol despite a lawmaker reimbursing for part of the food. Axiom President Micki Hackenberger declined a 7NEWS request to review the documents.

“They can’t accept money or a cup of coffee and there was a $350 meal,” Ross said of an Axiom reimbursement that asked for $350 for a meeting with Rep. Ed Casso, D-Commerce City. “That representative on Monday (in the CALL7 story) said that meeting never happened.”

Ross also questioned the veracity of a statement made by a lawmaker who told 7NEWS that it was proper to take meals from Axiom because Pinnacol officials were at the meals. Ross never mentioned Sen. Shawn Mitchell, R-Broomfield, by name, but Mitchell was the only lawmaker who said taking a meal from Axiom did not violate the law because Pinnacol officials were present.

“Amendment 41 says the lobbyist can't buy the meal,” Mitchell said last week. “My understanding is if a representative of the company is there, the company can provide a meal, so as far as I know, everything was done completely legally.”

Ross said he and General Counsel Dan O’Neil are the only ones who deal with the lobbyist and legislators and during the March meal both Ross and O’Neil were at a conference in Las Vegas.

“That comment raises a red flag in my mind,” Ross said.

Board member John Plotkin, who is heading a board committee investigating Pinnacol’s travel and policies, recommended a provision in future lobbyist contracts that violations of the law would result in immediate dismissal.

“We don’t want to be paying someone to violate the law,” he said.

Plotkin said the Axiom’s contract is up at the end of the month, and Pinnacol needs to determine whether to renew the contract in light of recent revelations.

Ross also said that if some legislators were reimbursing in cash and Axiom was nevertheless submitting the full bill to Pinnacol, that was improper.

“If legislators are putting money in the pot, and we’re getting billed the full amount,” that’s a problem, Ross said.

Plotkin also discussed a draft report of an investigation into Pinnacol trips and business practices after previous CALL7 stories questioned the agent incentive trips, including one last year to Pebble Beach that cost $318,000.

Plotkin said the report, which was requested by Gov. John Hickenlooper and will be submitted to him in June, will recommend that no board members attend future trips.

“It’s not worth it having board members attend those trips,” he said.

Board member Ryan Hettich, who was on the Pebble Beach trip, said the board already passed a policy to stop board members from attending the incentive trips, but Ross said that was an interim policy.

“Give us credit for stuff we did,” Hettich said.

Board President Blair Richardson said the ratio of Pinnacol staff to outside agents who were being rewarded for their work is too high.

Richardson said that in the 2003 trip, there were 19 Pinnacol staff to 18 agents and in Pebble Beach it was 31 Pinnacol employees to 20 agents.

Plotkin said Pinnacol should no longer pick up the bill for staff spa visits and other items that clearly do not help Pinnacol’s business.

“If someone is going to the spa, it should be on their own nickel,” he said.

Plotkin said the report determines that the compensation for Ross is in line with what CEOs of similar insurance companies receive.

“We never want to penalize Pinnacol or the CEO,” Plotkin said, adding Ross has successfully led Pinnacol to profitability. Earlier this year, the board voted to take Ross’s $163,000 bonus after he confronted CALL7 Investigator Tony Kovaleski at the Pebble Beach trip.

But Plotkin said his committee’s review shows that Pinnacol board members are paid significantly less than similar organizations. Pinnacol board members pay is set by the General Assembly. Pinnacol’s nine board members are paid a total of $52,000 a year while similar organizations have total pay of more than $300,000.

“We’re paid a fast food salary for the time we put in,” he said.

The board approved the draft of the report and is scheduled to vote on the final report in June.

Hackenberger and Mitchell could not immediately be reached for comment.

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