Denver Workers' Compensation Blog | Eley Law Firm

State Audit Confirms High-Flying Executive Compensation at Pinnacol

2010-07-29T12:46:37Z

A state audit committee recently confirmed some of the worst allegations that had been flying around the Colorado media about Pinnacol Assurance, the state's quasi-government health insurance company. The committee's report cited lavish bonuses for executives who also received generous travel and entertainment expenses.

Auditors said that since 1995, Pinnacol had paid bonuses 80 percent of the time though company management failed to hit performance targets. The board of directors for the state's workers' compensation insurer says it has adjusted its bonus practices and will review the audit to take further steps to rein in high-flying compensation for its executives.

However, even as the company stated it would tighten its belt, both Pinnacol's CEO and Board Chairman defended their company's compensation policies to the Denver Daily News as necessary in order for it to remain competitive in the industry.

The audit revealed that executives are due up to $4.3 million over two years if state lawmakers significantly change the way the quasi-governmental agency functions. Executives will receive guaranteed bonuses and benefits if the state takes control of operations and current management is let go.

The audit also revealed more than $1.9 million in employee bonuses from 2007 to 2009, as well as travel reimbursements of up to $500 per night for accommodations in luxury hotels  a reimbursement rate violating the company's own travel expense policies. That policy was violated 75 percent of the time, the audit committee found.

Auditors found that the base compensation offered to Pinnacol executives was in line with similar quasi-governmental agencies, but that the bonuses paid were significantly higher than in other agencies and in similar markets.

Pinnacol held about 55,000 workers' compensation policies in 2009, accounting for more than half of the Colorado's workers' compensation insurance market. The agency has been the state's largest workers' compensation insurer since 1996.

Last year, the company collected about $399 million in premiums, while paying out about $256 million in claims. Pinnacol has an over $700 million surplus, according to the state's audit.

Pinnacol provides insurance to employers that struggle to purchase private plans.

Limits on Surveillance By Employers?

2010-04-15T13:09:36Z

In Colorado, legislation to limit the surveillance of employees who have filed workers' compensation claims has recently passed a state House committee and is on the way to the state Senate. House Bill 10-1012 would allow surveillance on injured employees only if the employer can present significant evidence that the employee has filed a fraudulent claim.

The question before the Colorado Senate is whether or not surveillance infringes upon employees' right to privacy. Employers sometimes hire private investigators to obtain video and photographic evidence of an employee after filing a workers' compensation claim. For example, if the investigator records a video of an employee playing basketball with his friends just after claiming a serious knee injury, the employer would have reason to believe that the employee's claim was fraudulent.

Rep. Sal Pace (D) believes that recording employees violates their privacy. Opponents of the legislation claim that employees will take advantage of this new law and that Colorado will experience an increase in fraudulent claims.

Under the proposed bill, employees would have the right to question any efforts at surveillance, and employers would be required to respond to any inquiries with sufficient evidence to justify their suspicions.

Those found in violation of the proposed legislation would be subject to a fine of $1,000 per day.

If passed, H.B. 10-1012 will also limit the information that insurance companies can submit in workers' compensation hearings. This might increase the chances that claims are approved when employees are injured on the job.

Welcome to our blog

2010-01-22T16:29:26Z

Workers' compensation law evolves continuously. New regulations, new administrative rulings and new appeals work together to change the playing field. For the injured worker who is simply trying to get better and get back to work, the changing laws can be confusing.

At the Eley Law Firm in Denver, our entire practice has been devoted to workers' compensation for the past 25 years. This dedicated focus means that we keep track of the laws and what the changes can mean to our clients. With this blog, we will discuss what is happening in Colorado workers' comp law.

We would like to hear from you, too. If you have comments or experiences about workers' compensation you would like to share, please let us know. If you have comments about this blog or about Colorado workers' compensation or about our law firm, you are welcome to comment here. You are also always welcome to call our law firm at 720.279.9172 or toll free at 866.458.6360. There is no charge ever for a consultation with a lawyer at our firm.

Workers and their families are our clients -- our only clients. We take what you have to say very seriously.