Profitable Pinnacol workers comp resists lawmaker efforts to increase public input

DENVER– A controversial bill that aims to diversify and open up decision-making at Pinnacol Assurance, the impressively profitable quasi-governmental workers compensation insurance provider, passed out of the House Judicial Committee Friday on a mostly partisan vote. The hearing highlighted the tensions that define Pinnacol, an entity designed to serve the public but also required to act as a business.

workers comp

Bill sponsor Joe Mikloski, a Denver Democrat, aims to require Pinnacol to include a one-time injured worker and a physician on the directors board and to bring greater transparency to the board decision-making process by inviting the public to attend meetings.

The bill would increase the board from nine to eleven members and institute public comment periods at each of the meetings. Meeting agendas would also have to posted seven days in advance.

Pinnacol provides workers compensation insurance to nearly 60 percent of workers in Colorado.

“This is an effort to change the board of directors to reflect different perspectives, to make sure that key stake holders are heard on the board,” Miklosi said. “I think anybody who has power or influence should not be insulated, but that people should have the chance praise or to criticize [decisions].”

Englewood Democratic Rep. Daniel Kagan said the bill seemed to miss the point of board deliberations. The directors of a major operation such as Pinnacol, whether quasi-governmental or completely private, was to map out tactics to build success for the future. He said that the transparency provisions of the bill would create “public theater,” the benefits of which were unsure. Kagan ultimately voted to move the bill forward for larger debate.

Miklosi said they were going to have to agree to disagree. Those workers insured by Pinnacol are stakeholders and should have the opportunity to voice their opinions.

“I think that public comment is at the heart of democracy and process that allow a body to make policy.”

Bob Gardner, R- Colorado Springs, thought that the provisions would invite more than just stakeholders to the directors meetings.

“It is not just policy holders. It is not just clients. Anybody in the general public can just come and comment. That strikes me as unusual,” he said.

Rep. Sal Pace, D-Pueblo, reminded the committee that Pinnacol was not a privately owned company and that the stake holders were the citizens of Colorado.

“Pinnacol is a political subdivision of the state, [like] local government or like the University of Colorado… It is created by the state and it is owned by the state. It is not unreasonable to allow comment from the public.”

Gary Johnson, chair of the Pinnacol Assurance board, said doctors and one-time worker-patients had no place on the board. The board, he said, was obligated to concern itself with business priorities.

“By law, board members have a fiduciary responsibility to the company, not to any constituent group. A large insurance company needs more members with business experience. It would be a disservice to policy holders and injured workers if we restricted board eligibility.”

He pointed to the profitability Pinnacol has realized. He said serving shareholders was also the best way to serve the workers Pinnacol insured.

“Pinnacol has been working transparently for the best interests of the policyholder and shareholder since 2002.”

He said Pinnacol has grown its surplus from $215 million to $730 million in 2009 as a result of its management, which has also reduced rates to workers by 50 percent over the last five years and returned money to companies through a dividends program.

The legislation grew out of concern that Pinnacol might be denying legitimate claims for injury compensation.

Phil Hayes, a lobbyist for the AFL-CIO, said it was essential to balance perspectives on the Pinnacol board.

“We would like to see more transparency and adding more view points and public comment are good ideas that well be important.”

In the end the bill passed out of committee six votes to five.

Committee Chair Claire Levy, from Boulder, was the lone Democrat to vote no on the bill.

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