Press Room

Committee finds key problems with Colorado's workers' comp system

Thursday, September 17 2009

Pinnacol Interim Committee to bring recommendations Friday

DENVER—    Friday, the members of the Pinnacol Interim Committee will meet to consider draft recommendations and legislation regarding Pinnacol Assurance, the state’s workers’ compensation insurer of last resort.  Over the past two months, legislators have heard testimony from employees and employers, from doctors and from the insurer provider, Pinnacol. The testimony was eye-opening, shocking and, in some cases, heart-breaking.

“We heard testimony from more than two dozen people and received dozens more letters from people who believe Pinnacol is broken and needs to be fixed,” said Senator Morgan Carroll (D-Denver), chair of the Pinnacol Interim Committee.  “We will offer some suggestions tomorrow which will reduce rates, increase transparency and accountability, and ensure that injured workers are being protected and provided for.”

The committee has heard testimony and received documents revealing the following problems:
§ Pinnacol allegedly spied on injured workers making them feel like criminals (click here for story).   While Pinnacol spent $4.7 million in surveillance on thousands of workers, only 10 (out of 50,000+ claims) were actually convicted of fraud (0.02%).  (See Witness Testimony, Pinnacol Document on Surveillance).
§ News reports found “big bonuses and lavish spending” by Pinnacol including a $143,000 luxury suite at Invesco Field, $2,500 on dinner at Del Frisco's Steakhouse, including $144 a plate lobster and three $115 bottles of wine, $133,000 hosting clients at the exclusive Four Seasons resort in Scottsdale, AZ, and $109,000 at an island resort in South Carolina. (click here for story) and see Receipts)
§ Perhaps most shocking is the discovery that Pinnacol has a bonus, compensation and financial incentives to deny of claims and medical treatment.  (click here for story)  This is a direct financial conflict of interest with the statutory purpose of Pinnacol and workers compensation.  (See Pinnacol MBOs, Gainsharing Reports)
§ Injured workers had difficulty with denied claims, denied medical treatment and prompt payment of reasonable and necessary medical care. Some workers testified that Pinnacol's non-payment led to foreclosures, bankruptcy.  We heard from workers who had been crush victims, amputees, fire victims some blinded or in wheel chairs who reporting having to fight Pinnacol at every step of the way.  (click here for story) (See Worker Testimony, Letters)
§ (NOTE: to hear some of the injured workers’ stories, click here)
§ Medical providers reported difficulty in getting treatment approved, bills paid, and getting access to all of the necessary documentation to review claim.  (See Physician Testimony)
§ …but Pinnacol believes their current system is working well and they are very proud of their current business operations.  In a press release sent out Wednesday, Pinnacol’s CEO Ken Ross said : “We believe strongly that Pinnacol is not broke, so we’re saying don’t fix it.”
(NOTE: All documents from the Committee can be found here)

What we recommend:
§ Keep Pinnacol a quasi-governmental agency
§ Balance the Board at Pinnacol for better oversight
§ Increased transparency & accountability, including improved complaint provisions, collection of data and annual reporting
§ A mechanism for lowering rates for Colorado policyholders
§ Prohibit financial incentives or bonuses to deny or delay claims or medical treatment and measures to disclose, reduce conflicts of interest
§ Create a Workers’ Bill of Rights to better inform injured workers of their rights under Colorado law
§ Require a probable reason to suspect fraud prior to triggering surveillance on injured workers

“There are many things that Pinnacol Assurance has done well and better than its predecessor, CCIA,” said Senator Carroll; “However, it would be irresponsible to not acknowledge these problems that have surfaced and to take reasonable measures to solve them so that Pinnacol can be the leading example to the nation in delivery of workers compensation insurance.  Our state workers compensation fund, Pinnacol, insures 57% of the market, 55,000 businesses and covers 1.5 million employees in the State of Colorado so it’s imperative we meet these goals.”

The purpose of this interim committee is to ensure Colorado policyholders are paying the lowest premiums possible, that injured workers are getting the medical care and benefits they need to get back to work, and that Colorado's “workers compensation insurer of last resort” is stable, successful and solvent.