Pinnacol: John Hickenlooper's John Cevette appointment could put a good fox in henhouse

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Pinnacol Assurance, the quasi-public workers' compensation insurance fund, dodged a bullet last year when the legislature backed off on a proposed $500 million raid of its reserves to help fill budget gaps. But now Governor John Hickenlooper has nominated a critic to the Pinnacol board who'll be the proverbial fox in the henhouse -- proving himself to be crazy like a fox.

In exchange for agreeing to act as the agency of last resort for companies seeking workers' comp insurance, Pinnacol (subject of the 2003 Westword feature "Adding Insult to Injury") is exempt from state taxes; the governor governor also appoints the members of Pinnacol's board. That's been about the extent of the state's oversight -- until CEO Ken Ross threw a very public temper tantrum last year on the golf course at Pebble Beach, when KMGH reporter Tony Kovaleski asked him why Pinnacol was spending $318,000 on the junket. Ross's over-the-top response suddenly put Pinnacol in the spotlight.

Yesterday, the focus was again on Pinnacol's bad behavior, when a state Senate committee considered the proposed appointments of businessman Blair Richardson, who'd been nominated by Governor Bill Ritter, attorney John Plotkin and Senate Majority staffer John Cevette. After they vowed to skip the expensive perks, all three passed committee, with only state senator Shawn Mitchell voting against Cevette.

After that temper tantrum at Pebble Beach, Cevette had written on blog that Ross was an "idiot." And that wasn't all: "Coupled with a penchant to act like a Guido on a New York street corner, he is more a composite of a thug than the CEO of a state workers' compensation agency," Cevette wrote -- and he stands by that.

"We shouldn't be afraid to question this behavior," Cevette said in a statement released yesterday. "The management of Pinnacol has engaged in activities that are questionable, and it is important that the board evaluate those decisions and determine what changes are appropriate and necessary to ensure Pinnacol continues to fulfill its mission... Pinnacol is a good company that employs good people, but it has struggled under questionable management practices. I'm honored to be asked to serve as a member of the Pinnacol board. I look forward to supporting its mission to serve injured workers and provide affordable coverage for employers."

At the confirmation hearing yesterday, Mitchell asked Cevette whether he'd supported Senate President Brandon Shaffer's past proposal to take $500 million from Pinnacol's reserves. Committee chair Lois Tochtrop told Cevette he didn't have to answer, prompting Mitchell to write this letter to Shaffer:

President Shaffer,

I am writing to express my concerns about today's confirmation hearing for the members of the Pinnacol Assurance Board of Directors.

During the hearing, I asked Mr. Cevette a question pertinent to the position for which he was nominated. The chair of the committee, Senator Tochtrop, informed Mr. Cevette that he did not have to answer the question. Senator Tochtrop did not rule the question out of order; she arbitrarily shielded the witness from answering it. I believe that the members of the committee and the public deserve an answer, as the matter was directly related to Mr. Cevette's potential role as a Pinnacol Board member.

My question was whether or not Mr. Cevette expressed an opinion to the President of the Senate regarding SB 09-281, the bill which would have transferred $500 million from Pinnacol's reserves to the state's General Fund. The matter of whether or not Mr. Cevette approved of the bill at the time, or offered advice on it, is highly pertinent to his potential work on the Board.

Mr. Cevette's actions in the past regarding SB 09-281 cut to the heart of our concerns about his appointment: that serving on the Board of Directors while continuing in his present job will place him in a position of unavoidable conflict of interest. If Mr. Cevette continues to assert "staff-principal" privilege when questioned about potential conflicts of interest arising from his role as an advisor to the President, such secrecy will inevitably cast aspersions on the Board's work.

I respectfully request that Mr. Cevette provide the Business, Labor and Technology committee with an answer to my question. We owe nothing less than complete transparency to the public and the thousands of small businesses who have a stake in Pinnacol Assurance's success.


Senator Shawn Mitchell

Frankly, we have no problem with Cevette answering the question -- no matter which way his answer goes. One good way to assure transparency? Put a critic (or two, or three) on the Pinnacol board who can tell the company's managers when they're going the wrong way.

Cevette sounds like a much better bet than boardmember Debra Lovejoy, Pinnacol's head of ethics (and a former Shmuck of the Week), for example, who had no problem with taking the Pebble Beach trip -- or the pricey, pink lady's golf balls.

All three nominations now move on to a full Senate vote.

More from our Calhoun: Wake-Up Call archive: "Urban explorers invade remains of Denver's Stapleton International Airport."

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