CALL7 Investigators Air Special On Pinnacol Assurance

Two-Year Investigation Brings Reform Of Quasi-Government Agency

CALL7 Investigators aired a special on their two-year investigation into Pinnacol Assurance, which resulted in the governor appointing new board members, a board investigation into business practices and company's chief executive officer losing a $164,000 bonus. The investigation also forced changes in the travel policy at Pinnacol and the state.

The special focused on the conflict of interest between board members -- some of whom accepted tens of thousands of dollars in travel, meals and gifts from the company -- and the executives. The board members are appointed by the governor to oversee the executives, but approved hundreds of thousands of dollars in salary and bonuses for executives who took them on the luxury trips and provided gifts.

Gov. John Hickenlooper, Pinnacol Chairman Blair Richardson, Board Member John Plotkin, who headed the investigative committee, and CEO Ken Ross gave exclusive interviews for the special. All conceded the changes would not have happened without more than three dozen stories CALL7 Investigators aired on conflicts at Pinnacol.

Investigative reporting “embarrasses elected officials all the time, but it helps us to improve,” Hickenlooper said. “Your work here resulted in a material improvement for the state of Colorado.”

Pinnacol was formed as the state’s workers compensation insurer of last resort after the state agency that handled the function had serious financial problems. A quasi-government agency, Pinnacol receives no tax money but enjoys benefits of a government agency, like paying no state, federal or local taxes and enrolling its employees in generous state retirement pension.

The 7NEWS investigation started after lawmakers tried to seize Pinnacol’s $500 million surplus to balance the state budget. CALL7 Investigators exposed the agency spending tens of thousands on luxury meals, alcohol and golf trips.

After the initial story, employees notified 7NEWS of an agent reward trip to Pebble Beach Pinnacol, and CALL7 Investigators went with hidden cameras to California to see what happens during such trips. Hidden cameras captured board members enjoying expensive meals, $495 rounds of golf and alcohol parties at Pinnacol's expense.

When CALL7 Investigator Tony Kovaleski went to question then-board chairman Gary Johnson about the conflict, Ross stepped in, threatening Kovaleski and having to be held back by staff. Months after the trip, the board, with three new members appointed by Hickenlooper, rescinded a nearly $164,000 bonus Ross was due to receive because of his actions at Pebble Beach.

After the trip, CALL7 Investigators requested expense records, but Pinnacol went to court to block their release. Denver District Judge Morris Hoffman sided with 7NEWS, forcing the release of records that showed the Pebble Beach trip cost $318,000.

Ross, who agreed to an hour-long interview with no conditions, told Kovaleski that he regretted both his actions at Pebble Beach and taking the trip in the first place.

“I shouldn't have stepped in the way I did and confronted you,” Ross said. The Pebble Beach trip “was just a decision that we made and we realize, as I did, (we) made a mistake and while it's my responsibility I apologize for that mistake.”

In recent months, Ross embraced the changes and told Kovaleski he plans to stay on and build a better and strong Pinnacol Assurance.

Richardson and the board instituted reforms they believe will increase accountability and transparency for the quasi-government agency that will prevent future controversies.

“We are heading in the right direction,” Richardson said.

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