Lawmakers Seek Big Changes for Pinnacol Assurance
Recently lawmakers voted to take legislative action against the quasi-governmental agency Pinnacol Assurance, which provides workers' compensation insurance for many Colorado employers.

November 25, 2009 /24-7PressRelease/ -- Lawmakers Seek Big Changes for Pinnacol Assurance

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This October lawmakers voted to take legislative action against the quasi-governmental agency Pinnacol Assurance, which is responsible for providing last chance workers' compensation insurance for Colorado's employers. The move by lawmakers against Pinnacol comes after a committee formed over the summer to investigate allegations of wrongdoing by the company found enough alarming evidence to initiate action - including evidence of Pinnacol wrongfully denying claims for workers' comp benefits by injured workers.

The investigative committee was created after state legislators attempted to annex $500 million of Pinnacol's $600 million plus surplus to help alleviate the state's budget shortfalls. After strong opposition to the measure, including from Colorado Governor Bill Ritter Jr. and State Attorney General John Suthers, the lawmakers abandoned their efforts to take the surplus. Instead, the legislature passed a bill to form the committee to determine what should be done with Pinnacol. The committee included 10 legislators as well as six civilians and Pinnacol CEO Keith Ross.

After more than 40 weeks of hearings, the vote to take legislative action against the workers' comp insurer fell along party lines, with Democrats voting in favor of it and Republicans voting against it. Whether or not the seven proposed bills will ever become law will be decided in January, when the bills are sent to the full legislature for vote.

Allegations of Wrongdoing

The committee's investigation into Pinnacol revealed several practices by the company that are unethical at best and illegal at worst, including:
-Paying bonuses to claims adjusters for dismissing injured workers' claims
-Pitting teams of claims adjusters against one another in competition to claim these bonuses, further creating incentives to dismiss claims
-Paying bonuses to physicians who met certain performance standards, including net income targets
-Overcompensating company executives

Injured workers who had filed workers' compensation claims with Pinnacol also testified that the company had spied on them and used other underhanded methods to ensure they were not filing false claims. For example, one worker said that the insurance company sent nurses with him to all of his doctor appointments to report back to the company on what happened during the appointments.

Pinnacol CEO Keith Ross denied any wrongdoing by his company and said his company operates ethically, responsibly and in the best interests of its policyholders and injured workers. He claimed employees were not encouraged or paid bonuses to deny worker claims and that some surveillance of injured workers is necessary to protect the company from false claims.

The majority of the committee members, however, were not swayed by Ross's claims and said the $628 million dollar surplus posted by the company was the result of wrongfully denying legitimate claims by injured workers.

New Proposals to Reform Pinnacol

As a result of the committee findings, seven proposals were made that will impact Pinnacol's future business conduct. The measures, if passed, also may increase the protection injured workers receive in Colorado.

The seven proposals include:
-Limit the ability of Pinnacol to "spy" on injured workers who file claims for benefits to those cases where the company has reasonable cause to believe the claim is fraudulent. Injured workers would also have the right to a hearing to challenge the finding of fraud
-Create an "Injured Workers' Bill of Rights" that would require notice to all injured workers of their legal rights under state law and require Pinnacol to distribute the bill of rights to its claimants
-Abolish the policy of paying employees - doctors, claims adjusters or others - bonuses for denying claims. Physicians also would be required to reveal any conflicts of interests they may have to injured workers before treating them
-Require Pinnacol to give customer satisfaction surveys to the workers whose claims they handled and then post the results of these surveys annually on-line. Pinnacol also would be required to make the workers' compensation complaint procedure available on-line
-Raise the penalty against Pinnacol from $500 to $1000 per day for violating Colorado's Workers' Compensation Act
-Add an injured worker and designee from the state's Department of Labor to Pinnacol's Board of Directors
-Lower the rates for workers' compensation insurance for small businesses

Conclusion

Opponents of taking legislative action against Pinnacol argue that if these proposed bills become law, employers will face higher workers' compensation insurance rates. Those in favor of the bills, however, believe that change is necessary to prevent further abuse by the insurance company against injured workers.

The true impact of these proposed reforms will not be known until the bills have been approved by the legislature in 2010. Some, all or even none of the reforms may be approved.

In the meantime, it is important to work with an experienced workers' compensation attorney if your claim has been wrongfully denied by Pinnacol or another insurer. Injured workers have a right to workers' compensation benefits. Do not let an insurance company tell you otherwise. For more information, contact a knowledgeable workers' comp lawyer today.

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