3 Pinnacol Board Members Go On Luxury Company Trip

CALL7 Undercover Investigation Questions Independence Of Governor-Appointed Board

Three Pinnacol Assurance board members, who are appointed by Colorado’s governor to oversee the quasi-public agency, were golfing, wining and dining with the top Pinnacol executives at Pebble Beach resort earlier this month – raising new questions of their independence and ethics, a CALL7 investigation found.

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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, Chief Executive Officer Ken Ross says Pinnacol is a mutual insurance company and therefore can abide by different rules than state agencies.

But 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.

State Sen. Morgan Carroll, D-Aurora, who chaired a committee last year that reviewed Pinnacol’s business practices, 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.

“More money?” Kovaleski asked.

“More money for what I do would certainly be in order,” Ross said.

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.

Gov. Bill Ritter, who reappointed Johnson and Hettich, declined comment, saying he may talk after he sees the CALL7 Investigation. The state Senate confirmed Ritter's appointments the day before Johnson and Hettich left for Pebble Beach. Lovejoy was appointed by former Gov. Bill Owens.

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.