Pinnacol's Bizarre "Offer" to State
February 16, 2010
Pinnacol is Colorado's quasi-governmental workers compensation carrier of last resort in Colorado that has existed since 1914. It enjoys several tax exemptions and its employees are currently in PERA (the public employee retirement plan). They are currently being audited by the State of Colorado and were the subject of investigative hearings this summer, finding:
- problems with claim payment to injured workers
- interference and non-payment of owed medical care
- improper bonuses & financial incentives that reward non-payment of claims
- overcharged premiums (even including issued dividends)
- amassing a surplus higher than their private peers in CO
- amassing a surplus higher than their quasi-gov peers across the US
So when CEO Ken Ross wants to reduce state oversight, 55,000 businesses and 2.5 million workers in Colorado have a very real reason to worry. The problem has been too little oversight, not too much.
The Governor's office has been willing to get appraisals of the potential worth of Pinnacol apart from any ultimate decision about whether or not to sell them. Here is their joke of an offer to the state:
- $200 Million, paid $75 million in the 2010-11 budget year and $75 million the year after that. Pinnacol also would pay the state $50 million over 30 years. [Pinnacol is worth over $2 Billion in assets on the books. No higher math degree needed to see getting $200 million for a $2 billion asset is no deal.]
- They keep their tax-exempt status, avoiding taxes other carriers pay.
- They keep their current employees in PERA, a benefit reserved for public employees.
- They governor would have reduced appointment powers to the Board of Pinnacol Assurance.
- They would no longer be subject to oversight by the state auditor. [Just as they are undergoing the first performance audit ever in the entity's history]
- They would no longer be subject to Colorado's Sunshine Laws, Open Meetings or Open Records laws.
- Defeat the Pinnacol reform legislation (!?) [To be clear it is not legal offer money or something of value for the passage or defeat of legislation in Colorado, so how they intend to accomplish this is unclear].
Tim Hoover in the Denver Post wrote this article, which is worth reading: http://www.denverpost.com/ci_14407533
The offer in its essence is asking the state to:
- accept $0.10 on the $1.00;
- let them keep all the perks of being quasi-governmental (tax exempt, PERA);
- with NONE of the oversight;
- with condition of defeating legislation addressing their current deficiencies.
Seriously? This is the best laugh I have had all year. Perhaps this joke is meant to look so bad that when they make their next "offer" to the state, it can only look better in comparison.
That said, their process is bizarre, to say the least. Negotiators had been appointed to determine and craft and offer for consideration.
CEO Ken Ross (previously exposed for excessive salary, lavish and questionable expenses) got in front of the entire process and unilaterally declared this "offer" and skipped the part of the negotiators.
I'm not sure if CEO Ken Ross thinks he is also the CEO of Colorado but someone please give him a tutorial in checks-and-balances. Oh wait, this is what the Board is supposed to do.
I have never seen a quasi-governmental (or even a private entity for that matter) so adverse to any oversight or checks-and-balances. It reeks of a culture of autocracy. He is playing Russian Roulette with the lives of millions of workers and businesses in Colorado and needs to know this is not a game.
But make no mistake, a sale for any sum, will be a permanent mistake that will haunt Colorado's businesses and workers in perpetuity.
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