William M Mercer, the world's largest employee benefits consultancy, believes the private hospital lists system may face a legal challenge following a rash of court cases in the US.

It said the list system, which is meant to deliver cheaper premiums by controlling costs, has provoked litigation in the US because plans have failed to provide the right quality of medical care.

The consultancy believes UK PMI providers are more exposed to law suits because of the growth of pre-authorisation practices, where insurers can insist patients use cheaper treatments.