The North Tees and Hartlepool NHS Trust, which runs the town's University Hospital, paid out more than £7.8 million in claims between 2006 and 2007 – the second highest for the whole of the North East and North Yorkshire.



In total, £7,873,814 was paid as a result of claims brought against the trust, including £978,479 in legal fees.

The biggest pay-out was by County Durham and Darlington NHS Trust, with a £9,388,118 total including £1.4 million in legal fees.

The NHS says compensation costs have risen over the last few years due to above inflation increases in legal fees and the knock-on effects of court judgements.

Martin Callanan, Conservative Euro MP for the North East, called for an urgent overhaul of the compensation system.

He said: "I am very disappointed that so much cash is being wasted paying exorbitant legal fees."

Pressure group The Taxpayers' Alliance said hospital managers should make sure mistakes do not happen in the first place.

Mark Wallace, campaign director for the TPA, said: "So many NHS budgets are being increasingly used up in compensation claims.

"The NHS has got to be alive to the fact we live in an age of compensation.

"If trusts were doing their jobs properly and not making mistakes there wouldn't be any money to pay out at all."

Almost £36 million in NHS payments was made as a result of cases brought against hospitals across the North between 2006 and 2007, according to the figures released under the Freedom of Information Act.

It includes claims for medical negligence and a range of compensation cases which are handled by the NHS Litigation Authority body. Carole Pearson, acting director of clinical governance at North Tees and Hartlepool NHS Trust, said: "The NHS Litigation Authority acts as a type of insurance company for the NHS.

"We pay premiums according to how much we have done to minimise risk in the same way people do when they insure their house or car.

"We have achieved level two in the Clinical Negligence Scheme for Trusts in maternity care and level two in the general risk management standards which cover all other aspects of hospital care which demonstrates we have good systems in place to minimise risk to patients.

"This means the money paid out in legal fees and compensation is covered in our premium and are not a separate cost to the trust. The important thing is that people receive compensation when something has gone wrong."

A Department of Health spokesperson added: "It is right that NHS patients who are injured, as a result of clinical negligence, should be able to obtain correct and full compensation.

"There are a number of reasons costs may have increased over the past few years, such as the cost of legal fees rising significantly above average inflation, and the effects of judgements that set legal precedents on how particulars of settlements, such as the calculation of damages and future care, should be assessed.

"Our aim is to ensure NHS money goes on benefitting patients with less spent on legal costs. The NHS Redress Act means fairness for patients, not fees for lawyers."