National Organization of Injured Workers

Pinnacol Committee Proposes Workers'Comp Changes To Favor Injured Workers!

Pinnacol Assurance By Bob Mook
Denver Business Journal
September 18, 2009

Colorado legislators in the committee studying the operations of Pinnacol Assurance on Friday recommended legislation to impose more control over Colorado's Workers' Compensation insurance market.

Pinnacol, Colorado's largest Workers' Comp insurer, has been under fire for its high reserves, executive compensation and entertainment budget. Several injured workers testified in a previous committee meeting that Pinnacol's perks came at their expense and that the company used invasive spying techniques to deny claims.

Democrats in the committee, which has met since early August, recommended several proposals intended to discourage Workers' Compensation insurers from denying or delaying claims and create a more favorable environment for injured workers.

Among the proposals:

Requiring Workers' Comp insurers to conduct a survey of injured workers who made claims as part of an annual report. Sen. Mary Hodge, D-Brighton, who made the recommendation, admitted that administering such a proposal would cost the state time and resources and she "hasn't figured out how to pay for it" yet.

Changing the composition of Pinnacol's board by adding two new members - including the director of the Colorado Department of Labor and an injured worker. The nine-member board currently includes three Pinnacol stakeholders. Rep. Joe Miklosi, D-Denver, wants a bill that assures that two of the three stakeholders are "non-management" to give the board a "more blue-collar" perspective. Miklosi also proposed paying board members $12,000 a year for their participation. Board members currently only get a per diem for their help.

Pinnacol CEO Kenneth Ross, an ad hoc member of the Pinnacol committee, asked to add the CEO, "whomever that might be," to the board in an effort to create more balance. Miklosi said he wasn't interested in Ross' proposal, but Rep. Bob Gardner, R-Colorado Springs, said he would adopt the recommendation.

Increasing penalties for wrongfully denying or delaying Workers' Compensation claims by up to $1,000 per claim per day. The recommendation was made by Sen. Lois Tochrop, D-Thornton.

Making insurers demonstrate "probable cause" before initiating surveillance on fraudulent claims. The proposal, called the "workers' privacy act" also would create a new way for injured workers to pursue grievances against insurance companies without litigating. The recommendation was made by Rep. Sal Pace, D-Pueblo.

Prohibiting insurers from giving financial incentives for delaying or denying claims for medical treatment. The proposal, made by Sen. Morgan Carroll, D-Aurora, sounds similar to a bill that died in committee earlier this year.

Forcing Pinnacol to provide customers with the lowest premiums available according to the National Association of Insurance Commissioner's standards. The recommendation was proposed by Rep. Su Ryden.

"It's frequently said that Colorado has the seventh-lowest [Workers' Compensation] rates in the country," Ryden said. "I see no reason why it can't have the lowest."

Republicans also brought some of their own ideas to the table.

Sen. Shawn Mitchell, R-Broomfield, proposed drafting a resolution that Pinnacol "should charge less, pay more and not ask a lot of hard questions of injured workers." Mitchell rebuffed members of the committee who questioned if he was serious about the resolution.

"I think it's a least as reasonable as a lot of what has been proposed, but it's not a joke," Mitchell said.

Mitchell also asked legislative staff to draft a bill that would make Pinnacol "an entirely private, independently run mutual assurance company" instead of a political subdivision.

"Cut the leash and let it be," Mitchell said.

Mitchell also proposed a statute that would require any legislator sponsoring Workers' Compensation insurance legislation to disclose any conflicts of interests. The recommendation appeared to be aimed at Carroll, an attorney who has represented injured workers in the past.

Pinnacol has been a source of conflict among legislators since earlier this year when lawmakers attempted to raid $500 million in reserves from the quasi-governmental insurer to help the state's budget. But lawmakers retreated after Attorney General John Suthers said such a raid would be unconstitutional and Colorado Gov. Bill Ritter said he would not support the move.

Business leaders favor keeping Pinnacol's structure as it is, saying the insurer has kept rates low while stabilizing the state's workers' compensation market. Pinnacol, which acts as the "insurer of last resort," provides insurance to 57 percent of all companies in Colorado.

After the committee meeting, Ross sent the following statement:

"Today, the Interim Committee Studying Issues Related to Pinnacol Assurance presented a variety of legislative proposals. Most did not directly apply to Pinnacol and its operations. After the legislative drafting office releases copies of the proposed bills, Pinnacol will have the opportunity to comment on their merits. Questions are sure to be raised on both the impact any proposed bills will have on the Workers' Compensation system as a whole and on whether the proposals are actually within the scope of the committee's work."

Carroll lauded the committee's work.

"What we have recommended here today acknowledges real problems with common-sense solutions," she said in a release sent by Senate Democrats. "These measures keep what is working in the current system but improve the effectiveness of our current laws."

The sixth and final meeting of the Pinnacol committee is scheduled for Oct. 16, when members of the committee will vote on which proposed legislation to advance to the General Assembly next session.