Jenni Simpson applies to court of appeal for right to take on case amid fears it could lead to claims being traded like commodities

A vast, speculative market in negligence claims could be created if a widow from Norfolk persuades the court of appeal to let her pursue someone else's NHS compensation case.

The highly unusual legal manoeuvre threatens to congest the courts with thousands of applications that could force public authorities to pay out massive sums to avoid being bankrupted by litigation costs.

Jenni Simpson, from Norwich, paid £1 for the "right" to take over the compensation case of former hospital patient Alan Catchpole, also from Norwich, who contracted an MRSA infection while undergoing surgery in 2005.

The NHS Litigation Authority, which paid out £827m in claims and costs last year, warned that if Simpson's case succeeds it would be a "worrying development" that could lead to claims "being traded like commodities".

Her novel method has twice been struck out by lower courts. "It's a very strange case," a spokesman for the NHS Litigation Authority said. "It's the only claim of its type." The authority is funding the hospital trust's defence.

Catchpole, the court of appeal was told, decided not to pursue any claim himself. Simpson's interest in picking it up is not financial: her husband was diagnosed with the same superbug at Norwich and Norfolk University hospital before he died. She wants to highlight the hospital's alleged failure to control the infection.

But her success could open the floodgates to a secondary market in compensation claims driven by profit and buoyed up by no win, no fee agreements.

Simon Redmayne, representing Simpson, said her motive was not financial, but to see the hospital's infection control procedures tested in court and to "heighten the appreciation within the hospital that it needs to deal with MRSA".

He said there was no principle of law preventing alleged negligence victims assigning their right to take court action to third parties and, even if there was, it was anachronistic in light of the Human Rights Act and modern attitudes to access to justice.

Although he now has no direct interest in the case, the court heard Catchpole "cares about the result" and would like an apology from the Norfolk and Norwich University hospital NHS trust.

But Jeremy Morgan QC, for the trust, said it was against public policy for Simpson to be able to step into Catchpole's shoes and pursue his damages claim herself.

If the arrangement between Catchpole and Simpson were upheld, there would be nothing to prevent solicitors and "claim farmers simply buying causes of action from injured people and running the cases for themselves," he told the court. "There would be a ready market for the sale and purchase of claims," he said.

NHS trusts would also find themselves "on a hiding to nothing" in trying to defend claims by impecunious claimants – backed by legal aid, or no win, no fee deals – and would be forced to settle cases for more than they were really worth, just to save legal costs.

"By substituting a person of straw as a claimant, it ensures that, whatever the merits of the dispute, the rational course for the defendant is not to go to court itself, but to buy off the claim as cheaply as possible," he added.

Judgment has been reserved until a later date.