Third Party Actions (POL-87)

Chapter:
CLAIMS

Subject:
THIRD PARTY ACTIONS

Effective Date:
April 1, 2002

Last Updated On:
May 1, 2026

PURPOSE STATEMENT

The purpose of this policy is to describe third party actions and to explain when an injured worker has the option to either claim compensation from the Workers Compensation Board or sue a third party. 

REFERENCE

Workers Compensation Act, R.S.P.E.I. 1988, c W-7.1, Section(s) 1, 11-13, 29, 32(3)

Workers Compensation Board Policy, POL-74, Worker

Highway Traffic Act, R.S.P.E.I. 1988, c H-5

DEFINITION

In this policy:

“Motor vehicle” means a motor vehicle as defined in the Highway Traffic Act that is required to be registered under that Act.

“Third party” means a person or entity that is not considered to be a worker or employer under the Workers Compensation Act, R.S.P.E.I. 1988, c W-7.1.

POLICY

1. The workers compensation system provides a worker with benefits resulting from a workplace injury.
2. A worker’s injury or death may be caused, in whole or in part, by the actions of another person. In this situation, the worker or the worker’s dependants, may want to seek compensation for the injuries or death by bringing an action (sue) against that person.
3. Under the Workers Compensation Act (the Act), a worker or dependant cannot sue the worker’s employer or co-worker if the accident occurred in the course of employment.
4. A worker or dependant cannot sue another employer covered by the Act or any worker of that employer where the worker of that employer was acting in the course of employment, unless the work-related accident occurred as a result of the use of a motor vehicle. 

5. A worker or dependant may sue any other person (a third party) not within the scope of the Act, who may be responsible for the worker’s injury or death. 

6. Where a worker or dependant is entitled to sue a third party, they have to choose (elect) either:
   

   • to claim compensation from the Workers Compensation Board (WCB); or

   • to sue the third party.

The worker or dependant cannot claim compensation from the WCB and sue the third party. 

7. A worker or dependant must indicate their choice by completing an Election to Claim (CL-31) or Election to Claim by Dependants (CL-33) form. The election must be made within six months of the date of accident unless the time period is extended by the WCB.

Worker or Dependant Claims Compensation Benefits

8. Where a worker or dependant chooses to claim compensation from the WCB, the right to sue the third party is transferred to the WCB. 

9. Where a worker or dependant chooses to receive compensation, they can only change the election if agreed to by the WCB and all claim costs are repaid to the WCB.

   Action Against the Third Party 

10. The WCB is not obligated to sue a third party. The WCB will evaluate the claim against the third party and determine whether to proceed with a lawsuit. The WCB has the full power to settle or abandon the lawsuit if, in its discretion, it is inadvisable to sue the third party.
11. If the WCB decides to sue the third party, the WCB may do so in the name of the worker or dependant or in its own name or both.

12. A worker or dependant is required to cooperate with the WCB with respect to a lawsuit against a third party. If a worker or dependant fails to do so, the WCB may suspend, reduce or terminate benefits.

    Payment of Excess Settlement Amount

13. Where the WCB is successful with the third party action and more money is received through the courts or through a settlement than has and will be paid under the Act, the worker or dependant is entitled to the excess. 

    If the worker’s claim is closed, the excess is calculated by subtracting the following from the amount received:

    • The cost of compensation to the date of settlement or recovery.
    • Legal costs.

If the worker’s claim remains open, the excess is calculated by subtracting the following from the amount received:

• The cost of compensation to the date of settlement or recovery.
• The present value of any anticipated future costs of compensation. 
• Legal costs.

Worker or Dependant Sues the Third Party

14. A worker or dependant may complete the Election to Claim (CL-31) or Election to Claim by Dependants (CL-33) form indicating that they are going to sue the third party.
15. The worker or dependant will also be deemed to have elected to sue where:
    
    • They make a claim against or receive any amount in settlement from a third party prior to making an election; or
    • They have not submitted an Election to Claim (CL-31) or Election to Claim by Dependants (CL-33) form to the WCB within the required time frame. 
16. Where a worker or dependant elects to sue the third party, they are not entitled to receive compensation benefits from the WCB. They are responsible to sue without any involvement from the WCB and to pay for all costs associated with the lawsuit, including legal fees.
17. If a worker or dependant elects to sue and receives less than the amount of compensation that would have been awarded under the Act, the WCB may approve payment of compensation to the worker or dependant in an amount not exceeding the difference between:
    

    • The amount of compensation that would have been awarded under the Act; and

    • An amount that is, in the WCB’s opinion, a reasonable amount of settlement or recovery for the action.

The WCB will not approve the payment of compensation benefits in the case of a settlement of a lawsuit by the worker or dependants if it did not give prior written approval to the settlement.

Determining the Right to Sue

18. If legal action is considered against an employer or a co-worker as a result of a workplace injury, the WCB has the power—if one of the parties asks—to decide whether the lawsuit is allowed or if the Act takes away the right to sue.
19. The WCB cannot consider a request to remove the right to sue until a Statement of Claim has been officially filed in court.
20. Parties involved in the legal action can apply in writing to the WCB to remove the right to sue and must include a copy of the Statement of Claim and any other relevant court documents in their submission. The application should also say whether a WCB claim has been filed and provide the names of the other party’s lawyers if not already shown in the documents.
21. The employer may be asked to take part in the decision about removing the right to sue, even if they are not part of the court case, as long as they have a direct interest.
22. The WCB will decide whether the lawsuit is allowed or removed under the Act. 
23. When determining whether the right to sue is removed, the WCB will review all of the evidence and arguments provided, even if a decision has been previously issued by a WCB staff member.
24. Decisions are generally based only on written evidence and submissions. It is the responsibility of all relevant parties to provide their evidence and arguments to the WCB. The WCB may also ask questions or investigate the status of the parties involved.
25. Requests for an oral hearing must be made in writing and provide reasons for the request. Oral hearings are only generally considered when the facts are heavily disputed, or the issues are complicated and would benefit from verbal discussions and questions. The WCB can also decide on its own to hold an oral hearing.
26. The applicant will be asked to send in their submission first. It must clearly describe their preferred outcome and include all their evidence and arguments. This submission will then be shared with the other party, who will be asked to respond. That response will be sent back to the first party, who will get a chance to reply.
27. The WCB’s decision about whether the right to sue is removed is final and cannot be appealed.

Federal Government Employees

28. This policy does not apply to workers who are employed by the federal government covered under the Government Employees Compensation Act.

HISTORY

May 27, 2010 - Amended to clarify that an election to claim benefits is final except under specific circumstances.

September 25, 2008 - The policy was updated as a result of the 60 month policy review process. The policy has been amended to ensure the wording in the policy is consistent with the Workers Compensation Act and to clarify how Federal government third party actions are managed.

Board of Directors Approval Date: March 28, 2002