The HSE could have to pay hospital consultants up to €700 million in compensation for failing to pay wage increases that were due as far back as 2008, according to the Health Service Executive's latest calculations.

It had previously estimated that the HSE would be liable for back payments totalling up to €300m.

However, a recent detailed analysis of the potential liability revealed that the cost could be much higher - with serious implications for health service funding.

In 2008, the Department of Health negotiated new contracts with hospital consultants.

They had been paid up to €240,000 a year if they restricted private practice and changed work practices.

However, then health minister Mary Harney unilaterally vetoed payment of part of the pay rise due to the economic crisis.

Two members of the Irish Hospital Consultants Association, endocrinologist John McDermott and anaesthetist Thomas Hogan, challenged that decision at the Employment Appeals Tribunal and won.

Dr Hogan was awarded retrospective payments totalling €100,000, while Dr McDermott was awarded €14,000.

With another 2,300 hospital consultants entitled to make similar claims, the HSE had previously estimated implementing the Hogan/McDermott EAT ruling could cost €300m.

After deeper analysis, that estimate has now rocketed to up to €700m.

The HSE and the Department of Health declined to comment.

However, if a pending High Court appeal upholds the EAT ruling, the consequences for health service funding could be extremely serious.