Patients will no longer have to struggle with lawyers and courts to get compensation for injuries they may have suffered in hospital, the government said yesterday. Jane Kennedy, the health minister, said a scheme offering quick settlements of up to £20,000 a time was "an important step in preventing a US-style litigation culture". While the most serious cases would still end up in court, thousands of lesser ones would be settled quickly without recourse to lawyers.

Mistakes made by the NHS cost it more than £500m a year. Nearly all compensation payments, 98%, are not big settlements for injuries, such as brain damage to a baby; they are for much less severe injuries, which may heal completely.

But the delays in getting such claims settled cause prolonged distress to patients, and cost the NHS vast sums in legal fees. Of the £503m bill for clinical negligence in the NHS, about £150m goes to lawyers.

The NHS redress bill, published yesterday, offers a fast-track service for most of the 3,000 patients a year who complain. Patients will be able to submit a claim, but hospitals, doctors, midwives, and other healthcare staff will also be encouraged to trigger the process in an attempt to expedite settlements.

Minor claims take about a year to be settled by the NHS Litigation Authority at the moment. Its chief executive, Steve Walker, said that in a pilot of the scheme most cases had been dealt with in six months, which would be the target.

"The patient can pull out and go to a solicitor at any stage until the payment is agreed," he said. "Officials will tell the patient if the claim is worth more than £20,000, the ceiling, and, at the end of the process, the NHS will pay for the patient to get an independent verdict from a lawyer of their choice before agreeing to the settlement."

Ms Kennedy said: "We want to improve patients' experience of the NHS by giving patients what they tell us they want when something goes wrong with their care - an apology, an explanation of what's happened and action to put things right." She said she expected more, not fewer, claims, because at present many patients did not bother to pursue cases or gave up for fear of large legal bills.

Patients will have the opportunity to receive care, rather than money, under the scheme if they so choose. The NHS will be required to be proactive, review any incident where something has gone wrong, and trigger the claim process for the patient if appropriate. The reform is strongly linked to attempts to encourage the NHS to be more open about mistakes and to learn from them.

The National Patient Safety Agency was set up two years ago to collect anonymous information on such cases from hospitals, clinics and GP surgeries.