Cases involving claims against NHS Trusts for negligence are dealt with by NHS Resolution (formerly called the NHSLA, or NHS Litigation Authority). NHS Resolution was set up by the Government to deal with claims against NHS Trusts.
The NHS Resolution acts in a similar way to how an insurance company would act for an individual. Every year, each NHS Trust pays a premium to NHS Resolution so that they have cover in the event of a claim being made against them. This is similar to a car owner paying a premium to an insurance company to cover them in the event of a car accident.
Money paid out in compensation to victims of negligence comes from the premiums paid by the Trusts to NHS Resolution. Each NHS Trust is required to have cover in place to pay any claims, just in the same way that a car owner is required by law to obtain appropriate insurance cover.
A claim for compensation will be paid by NHS Resolution on behalf of the Trust you are claiming against (“ the Defendant Trust”). A Trust pays an annual premium to NHS Resolution irrespective of whether you decide to pursue a claim or not. There are similar organisations representing GPs, dentists, etc.