A medical negligence lawsuit on behalf of a 4-year-old boy who suffered severe and permanent birth injuries in an Air Force Hospital may cost the government at least $11.1 million because the Justice Department turned down a settlement by its own trial attorneys for $3.6 million, court documents show.

The settlement was vetoed by Assistant Attorney General Richard K. Willard, who, as head of the Justice Department's Civil Division, has been the administration's point man in fighting the so-called liability crisis. Willard led the administration task force that cited skyrocketing damage awards as a major cause of soaring liability insurance costs and proposed such measures as limiting punitive damage awards and awards for pain, capping attorneys' fees and encouraging alternatives to litigation.

President Reagan has endorsed the recommendations.

The child, Johnathan Scott, was born about six weeks prematurely at the Elmendorf Air Force Base hospital in Anchorage, where his parents David, an Army military policeman, and Karen were living.

Johnathan has spastic quadriplegia, meaning that he has poor control of all four limbs and no expectation of ever being able to walk or feed or care for himself unaided. He has abnormal speech and eye movements, and a limited ability to communicate.

The Scotts sued the government in November 1984, attributingJohnathan's injuries to "negligent acts and omissions," including improper diagnosis and monitoring of Karen Scott during labor and delivery, unnecessary surgery, and failure to provide adequate perinatal and postnatal care to the baby.

The lawsuit sought $35 million in damages. After Willard rejected the $3.6 million settlement, U.S. District Judge Jack E. Tanner of Tacoma, Wash., tried the case without a jury and awarded $11.1 million on May 27.

A spokesman for the Justice Department's Civil Division said that Willard had no comment, but an appeal to the 9th U.S. Circuit Court of Appeals is being considered.

The $11.1 million award included $1 million to Johnathan for pain and suffering over his entire expected 71-year lifespan, $300,000 to Karen "for injury to the parent/child relationship," and $50,000 to David for the same injury.

The Willard task force proposed a $100,000 limit per person for pain, suffering and non-economic damages.

"Johnathan has and will continue to experience pain, discomfort, suffering, fears, anxiety, inconvenience and other mental and emotional distress," Tanner said in written findings of fact and conclusions of law.

The mother and father are entitled to awards for "emotional anguish and mental distress" that have "damaged the parent/child relationship . . . and will continue to do so," he wrote.

Tanner orginally set the case for trial last September, but granted repeated requests for delay by trial attorneys from the Civil Division's Torts Branch in Washington.

The Scotts' trial lawyers, Carl A. Taylor Lopez and Jane I. Fantel of Seattle, opposed the government's motions to postpone the trial.

"An injured child was involved who would suffer even more injury as a result of delay," Lopez said in an affidavit in November.

"Every day that goes by diminishes the level to which therapy can elevate him. This time of Johnathan's life is critical to his development, and it is being trifled away by the very bureaucracy that hurt him in the first place," Lopez charged.

The Scotts separated about a year after Johnathan was born and subsequently were divorced. The mother, who now lives in a Seattle suburb, provides the constant care that Johnathan requires and also cares for another son who is 7. The father lives in Anaheim, Calif.

Karen "has been unable to work and has no other source of income," Judge Tanner wrote in the findings of fact and conclusions of law.

"Karen and Johnathan Scott have been dependent upon government assistance to pay for the necessities of life and also to pay for physical therapy, occupational therapy, and special equipment," Tanner said.

Johnathan, he added, "will require special equipment, medication, medical therapy, and training for his medical disorders and disabilities for the balance of his life," and will need computer assistance to enhance his speech.

The judge also said that Johnathan is entitled to awards for other causes, principally $8.75 million for "complete impairment of his earning capacity."

In the affidavit, Lopez said that on Sept. 15 -- the eve of trial -- the government said tentatively that it would settle for $3.6 million. Lopez and Fantel agreed to the Justice Department's request that the trial date be canceled "to allow certain higher-ups in the U.S. Attorney General's office to review and approve the settlement."

Lopez said in the affidavit that the Civil Division's attorneys assured him and Fantel that the Justice Department "never had" upset a settlement that its trial counsel had agreed to. Over the next several weeks, Fantel said in an interview, the government's lawyers said that the matter "was going up through the channels and that we should sit tight."

Lopez and Fantel said they took for granted that the settlement would hold, and consequently agreed to pull the case from the trial calendar.

Seven weeks went by in which they made numerous telephone inquiries to the Civil Division. Finally, Faith Burton of the Torts Branch told them of the decision to reject the settlement. Lopez signed the affidavit on Nov. 6, the day following the rejection.

The trial began on April 16, about two weeks after Reagan endorsed the Willard task force's recommendations.

Over the several weeks that the trial lasted, Fantel said, "the government spent untold amounts of money to bring four trial lawyers from Washington to Tacoma."

If the Justice Department appeals, the result will be to delay meeting Johnathan's needs "even further and expending additional taxpayer money and incurring interest at a rate of approximately $2,000 per day," Fantel said. CAPTION: Picture, Assistant Attorney General Richard K. Willard vetoed $3.6 nukkuib settlement. ASSOCIATED PRESS