An ingrained compensation culture is “bleeding health and education services dry”, researchers have said.
Payouts by the NHS Litigation Authority (NHSLA) have trebled in the past decade, standing at £911m in 2010/11, according to the report by the Centre for Policy Studies at Kent University.
Of this, £863m was paid in connection with clinical negligence claims, the report says.
It adds that as of March last year, the NHSLA estimated its potential liabilities at £16.8bn, though a large proportion of cases do not reach court.
Out of 63,804 medical negligence claims received by the NHSLA, 38% were abandoned by the claimant, 45% were settled out of court 3% had damages approved or set by a court and 14% have yet to settle.
Tim Knox, director of the Centre for Policy Studies, said: “This rise in the compensation culture has huge - if largely hidden - costs.
“In particular, it has created a climate in which professionals will prioritise litigation avoidance above what is best for their pupils or patients.”
The report warns that instead of improving safety and accountability, it has resulted in “significant costs to the quality of services, the experiences of those who use them”.
It continues: “The combination of an ingrained compensation culture and litigation avoidance is bleeding the health and education services dry, both financially, and in terms of their public sector ethos and professional role.”
Report author Professor Frank Furedi said fear of legal action can hold back progress and creativity.
“It erodes professional autonomy, stifles innovation, leads to defensive practices in both hospitals and schools and encourages greater bureaucracy,” he said.
“‘Best practice’ is now defined as having checked all the boxes in a quality assurance form rather than doing what is best for the patient or pupil.”