NHS England wrote to GPs in May this year to inform them that around 150,000 patient records had been archived by mistake rather than transferred to practices.
The records have now been returned to practices, leaving GP practices facing extra workload to assess them and identify whether patients could have come to harm because of the blunder.
BMA GP committee leaders have insisted that practices should receive additional 'support and resources' to complete the additional work - but talks with NHS England broke down.
The BMA has now decided to press ahead with legal action against NHS England to secure payment to cover GP practices' costs - and is appealing for practices to come forward to join a potential legal action.
A BMA spokesperson confirmed that the association was seeking 'quality test cases' that could be used in legal action against NHS England. The spokesperson added: 'We want practices to be fairly compensated for the work that it takes to sort the problem created by this error, through no fault of their own.'
A newsletter sent to GPs by Leeds LMC this week says legal action became inevitable because 'NHS England was not prepared to provide the amount of funding necessary to cover GP and practice staff time required to do this assessment properly, and GPC England was not prepared to agree to a settlement which they believed would not fully compensate practices for the problems created by Capita'.
The BMA has not revealed how far apart it was with NHS England on agreeing a fee - but could be seeking a substantial sum for any practices forced to work through multiple patient records.
In 2016 - after a previous archiving mistake by a provider that ran primary care support services in parts of England before Capita took over - the BMA agreed a funding package to pay practices for extra work. Under the deal agreed in that situation practices were offered a fixed payment of £50 for processing less than 20 documents, £100 for 20 to 50 documents, and £50 for each batch of up to 10 items for any practice with more than 50 documents in total to process.
However, in the 2016 case - which saw more than 100,000 items of correspondence with patients kept in a warehouse by mistake rather than sent to practices - the BMA says that practices were sorting through indivdual documents, rather than entire patient records.
The BMA spokesperson warned that 'workload involved is far greater for entire records'.
Primary Care Support England (PCSE) was outsourced to private provider Capita in 2016 in a £330m seven-year deal. The National Audit Office warned last year that the 'high-risk' decision to outsource the service had left patients at risk of serious harm.
MPs have called the decision to outsource PCSE to Capita 'a shambles'. GPs have experienced problems with patient record transfers, pensions, practice funding and more since Capita took over the service.
A Capita spokesperson said: 'We have apologised to GPs affected by a delay in processing paper medical records. PCSE successfully moves over 6m paper records each year and on average, GP practices had just 20 delayed records to review. There is no indication that any patient was harmed as a result of this incident.'