The all-party Select Committee on Public Administration said reluctance of hospitals to offer financial redress when things went wrong fuelled the growth of court actions for negligence, resulting in higher settlements inflated by legal costs.
Other government departments operated a code of practice for paying compensation and in 1997-98 the ombudsman obtained financial redress for complainants in 212 cases ranging from pounds 6 to pounds 50,000.
But requests for compensation by patients were seen as a signal they were considering legal action, and resisted even when complaints were upheld.
Last week the National Audit Office reported that the cost of medical negligence cases had risen to an estimated pounds 2.8bn for 1998 and the bill is said to be increasing at pounds 100m a year. The charity Action for Victims of Medical Accidents estimates there are 82,000 cases of negligence in hospitals every year.
In evidence to the select committee, which published its annual report on the health service ombudsman yesterday, Sir Alan Langlands, chief executive of the NHS, rejected the idea of compensation, saying he did not wish to see the NHS "turning into a small claims court". But earlier, the ombudsman, Michael Buckley, said NHS compensation should be paid in in line with a code of practice.
The committee also calls for GPs to be required to give reasons if they remove a patient from their lists. In two cases the ombudsman named and shamed GPs who had removed patients - in one case with the patient's entire family - after a breakdown in communication.
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