INC. YOUR GLOBAL MANUFACTURING RESOURCE

A HILBERT COMPANY

Phone: 814.474.5511 I Fax: 814.474.9483 7900 West Ridge Rd., Fairview, PA 16415 www.phbcorp.com

Representative Jim Cox, Chair Representative Ryan Mackenzie, Vice Chair House Committee on Labor and Industry

Monday, May 6, 2019 11 :00 AM G-50 lrvis Building Commonwealth Avenue, Harrisburg, PA

Support for H.B. 1234 -An Act amending the Workers' Compensation Act

John L. Hilbert, Sr. - President

Thank you Chairman Cox, Vice Chairman Mackenzie, and members of the Committee for allowing me to submit written testimony on behalf of H.B 1234. Even though I cannot be physically present today, it is imperative the Pennsylvania General Assembly is aware there is no sufficient insurance coverage against these claims and this issue should belong under the Workers Compensation Act.

Located in Fairview, Pennsylvania, PHB is a privately held corporation with roots stemming from die casting since 1906. We became incorporated as PHB in 1984. PHB is recognized across the globe as a fully integrated supplier of quality parts and assemblies. With approximately 500 dedicated employees and over 750,000 square feet of floor space, manufacturing capabilities consist of zinc die casting, aluminum die casting, machining, plastic and rubber molding, tool & die, injection molding, and product assembly.

Recognizing that skilled people and technological growth is the keystone for success in today's global marketplace, PHB continues to commit resources to remain an industry leader. High-tech equipment and machinery feature process monitoring, computer imaging, robotics, CNC and state of the art software including AutoCAD, Pro-E, MAGMAsoft®, CAD/CAM and EDI compatibility. We service many markets including plastics, appliance, telecommunications, electronics, electrical equipment, automotive, transportation, medical, industrial equipment, instrumentation, aerospace, and defense industries.

PHB's involvement:

• PHB, Inc. has been named in cases over the last few years that have consumed its Employer's Liability coverage for those years. Any future cases in those years will result in PHB, Inc. using its funds to cover all legal costs and any potential settlements or awards. The potential costs of these cases will negatively impact PH B's financial health as well as mitigate any future investments in labor and capital equipment.

• PHB cannot afford to "roll the dice" concerning future claims and their financial impact to the company.

• Insurance companies will quit writing Employer's Liability policies and the cost of Workers' Compensation insurance will rise to levels that will impact investments in the business - be it employee, equipment, or technology.

• The spirit of the Act, and the subsequent negative financial impact on businesses in Pennsylvania, has been changed based on a grammatical interpretation of the word "it" in the original Act.

o Explanation from an article by Jerry Milton, a nationally recognized expert and education consultant, at Insurance Agents & Brokers of Pennsylvania:

The PA Supreme Court concluded that the term "it" applies to the term "act" and not to "compensation." Therefore the exclusivity provision of Section 303(a) does not apply to common law claims made by employees against their employers for occupational disease which manifest outside of the 300-week period prescribed by Section 301 (c)(2).

Before this decision, employers in PA were protected by the Act's exclusivity provision from common law claims by employee even if the disease manifested after 300 weeks.

• The recent change in PHB, Inc. ownership and assumption of this liability will correlate to cautious expansion, hiring and investment in the business based on the current legislation.

PHB's support to amend the Workers' Compensation Act: • The Workers' Compensation Act was created in 1915 to protect BOTH the employer and

employee. o New interpretation of the word "it" solely protects the interest of the employee only.

• The creation of the Workers' Compensation Act was to keep businesses solvent and employees protected financially from medical bills, lost wages etc. due to work injury.

• Pennsylvania is the only state, that I know of, for this to be an issue currently. Other states will most definitely find themselves in the same situation.

• There really is no sufficient insurance coverage for these types of claims, as this is a retrospective issue and could not have been foreseen.

o Potential to cause extreme hardships for employers in Pennsylvania • This issue will spread from manufacturers to a multitude of other industries (landscapers,

plumbers, property management, etc.) in Pennsylvania. (current lawsuits with "Roundup", Talc powder, etc.)

• These claims should be handled with the Workers' Compensation Act and not Employer's Liability.

• General Liability/Umbrella carriers began to exclude asbestos claims in the late ?O's/early 80's .