Judge: Colorado Public Records Law Applies to State Workers’ Comp Fund

Pinnacol Assurance must make public information about a May golf junket for board members, a Denver District Court judge ruled.

The quasi-public, state-backed workers' compensation insurer must abide by a public records request made by KMGH-TV of Denver, Judge Morris B. Hoffman ruled. Pinnacol qualifies as a public company under the Colorado Open Records Act, the judge said.

The station aired a news report about the board trip to Pebble Beach, S.C. The trip, which critics said was an extravagant perk, came at a time the Colorado Office of the State Auditor was conducting an audit of Pinnacol's operations. Pinnacol refused the station's request for financial records, saying it was a "private business incentive event." The company asked the court to provide guidance on how the open records law applies to it.

"Pinnacol believed this request was improper under Colorado law because it involved disclosing records that do not relate to any public function, and do not involve the expenditure of public funds. The request, in our view, improperly sought records that could harm Pinnacol's competitive position and involve an improper intrusion into the privacy of individuals who attended the event," President and Chief Executive Officer Ken Ross said in a statement.

Pinnacol is reviewing its options, Ross said. Attempts to reach Pinnacol for additional comment were unsuccessful.

The state audit faulted Pinnacol for its spending and employee-bonus practices. The audit found "weaknesses" in the company's policies and controls for travel and entertainment expenses -- which amounted to about $1.5 million in 2009 -- and cited the insurer for failing to enforce its own policies. The pattern of violations "borders on abuse," the report said (BestWire, June 9, 2010).

Pinnacol, which holds a more than 50% market share in Colorado, is statutorily mandated to be a political subdivision of state government, with a board of directors appointed by the governor -- but to conduct business as a mutual insurance company that pursues private business. It is also the state's workers' compensation insurer of last resort.

The insurer has considered proposals to go fully private and may make another pitch to state lawmakers next year, Ross has said. State lawmakers passed five bills in the session to put more controls on Pinnacol, which the insurer described as mostly positive (BestWire, May 14, 2010). Ritter signed them into law at the end of May.

The top five writers of Colorado workers' compensation insurance in 2009 were: Pinnacol Assurance Co., with a 53.4% market share; Liberty Mutual Insurance Cos., 7.6%; American International Group, 6.7%; Hartford Insurance Group, 5.5%; and Zurich Financial Services NA Group, 4.1%, according to BestLink, which provides online access to A.M. Best's Global Insurance & Banking Database.

(By Sean P. Carr, Washington Correspondent: [email protected])