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Big Ag’s Secretive $50-Million Obamacare Contract

Nov20

americangothicWestern Growers Association, one of California’s most powerful conservative business forces, is profiting handsomely from Obamacare — despite its fierce opposition to the Affordable Care Act.

Calbuzz has learned that a $50-million contract to oversee implementation of health insurance for small businesses in California was awarded to a private company wholly owned by the heavyweight ag group. The contract was granted by Covered California, the organization set up to manage Obamacare in the state.

Pinnacle Claims Management Inc. — a subsidiary of Western Growers Service Corps, which itself is owned by Western Growers Association – won the lucrative three-year contract in April, with only one other company – Xerox – bidding for the job, confirmed Lizelda Lopez, spokeshuman for Covered California.*

“We are excited to partner with PCMI in this historic moment when we can help thousands of small businesses provide affordable health care for their employees,” Peter V. Lee, Executive Director for Covered California said in a widely ignored press release at the time. “PCMI has demonstrated the requisite knowledge of California’s small business community and has shown us they can move quickly and effectively in providing all the services we require to help Covered California get up and running this fall.”

Fair enough, but what was not revealed in the press release, or disclosed in any coverage before now, was that PCMI is owned by Western Growers Association.  According to Oscar Hidalgo, Covered California’s communications director, the organization knew at the time that Pinnacle was owned by WGA.

Beyond its opposition to Obamacare, their contract is significant for another important political reason: loyal Calbuzzers will recall that the influential lobbying group has used its political and financial clout – sometimes secretly, surreptitiously and sneakily — to fight against candidates who are the kinds of progressives who firmly support the legislation.

David Zanze

David Zanze

The high cost of investigative journalism: Unraveling the tangled relationship between PCMI and Western Growers required some Actual Reporting, because information about such companies is hard to come by, heavily shrouded in layers of bureaucracy. At enormous expense, Calbuzz selflessly scoured the internets, finally obtaining copies of the bylaws and articles of incorporation of Pinnacle and Western Growers from the Secretary of State’s office (price tag: $26.50!).

Pinnacle and Western Growers both can be found at 17620 Fitch St. in Irvine. Their agent for service of process (attorney) is the same: Jason Resnick, who is also vice president and general counsel of Western Growers.

Until a half-hour after we started asking questions of Pinnacle spokeswoman Natalie Krosel last last week, the president of Pinnacle, David Zanze, was listed on WGA’s staff page as senior vice president of Western Growers. Then, suddenly, Zanze’s identification on the Western Growers web site was changed to senior vice president of Western Growers Assurance Trust. (Never mind: Zanze is listed as senior veep of Western Growers all over the internets, like here, for example, at least until WGA changes that, too).

Why Western Growers was so eager to alter Zanze’s identification is not altogether clear. Western Growers Assurance Trust, sponsored by Western Growers Association, was established in 1957 as a Multiple-Employer Welfare Arrangement to provide health benefits for members of Western Growers Association, allowing its members to provide health plans for their field and seasonal workers. WGAT reports to its own Board of Trustees.

Maybe the suits think it appears less untoward for the president of a company with a $50-million contract to manage small business insurance under Obamacare to be vice president of a health benefits trust, but not the vice president of a big, tough special interest lobby and political force. Since they’re all part of Western Growers, it seems like a difference without a distinction to us.

Zanze refused to speak to Calbuzz, but Krosel confirmed for us that Pinnacle is a subsidiary of Western Growers Service Corps and that Western Growers Service Corps is a subsidiary of Western Growers. When we asked if the profits from Pinnacle belong to Western Growers, she replied, “Yes.”

And while she would not tell us who the directors of Pinnacle are, claiming that’s because it’s a privately-held company, according to the company’s filing with the Secretary of State, the officers and directors are:

David Zanze, CEO; Shannon Kay Hinz, Secretary; Ward Kennedy, CFO, and Directors David Gill of King City, Edwin Camp of Bakersfield and Gary Pasquinelli of Yuma, AZ.

Ward Kennedy, by the way, is also senior vice president and CFO for Western Growers, so he’s the  guy who knows how the money flows. Except he’s not listed on Pinnacle’s web site. But Patty Benkowski is – as vice president of operations, the exact position she holds over at Western Growers.

Tom Nassif

Tom Nassif

A double standard for Big Ag: Hypocrisy is, of course, hardly rare in politics. But the Western Growers-Pinnacle variety is especially glaring. Here’s Western Growers President, Tom Nassif, in an open letter to his members in November 2012 titled “Regardless of Election, Obamacare Will Throw You a Curve:”

Will we continue to work toward the repeal of Obamacare and, short of repeal, amendments to address agriculture’s unique problems? Yes. We are requesting that state and federal governments exempt the agriculture industry from Obamacare until meaningful immigration reform has been enacted by legislation or an ag provision has been included in the regulations promulgated by Obamacare; we are requesting that Multi-Employer Welfare Arrangements like WG Assurance Trust be allowed to sell in the exchange to ag businesses.

In other words: We’d like to undo the whole damn thing but if we can’t we want to be exempt until immigration reform is adopted (hah!) or at least be allowed to profit from the crappy program.

It’s also worth emphasizing how important, and secretive, a role Western Growers played last year in ousting incumbents favored by Speaker John Perez and other legislative leaders to help electing members whose views were more attuned to their own:

There’s also the fact that the California Chamber and Western Growers – after thumping Mr. Speaker Himself — appear to have tried to hide their involvement by working through shell vendors, sharing valuable data and personnel and failing to report their spending until they were exposed months later. (HT to Dan Morain for digging into this whole issue)…

The Great and Powerful Speaker of the Assembly had lost two incumbent seats. Despite his bullyboy threats to punish anyone who opposed his people, the Western Growers had kicked his ass.

Inquiring minds who want to find out more about Pinnacle — the firm now charged with administering the Small Business Health Options Program (SHOP) — can call them at the numbers listed on their web site. But when we did, our calls were all transferred to Western Growers Association.

Funny that.

*When we first contacted Lopez, she said our inquiry about who had bid for the SHOP contract would be treated as a Public Records Act request. After we gently pushed back a bit up the food chain at Covered California (in our usual calm and tactful manner) , we were told who the other bidder was.


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  1. avatar 4oceans says:

    Thank you…. this is really quality journalism.

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