The Health Service Executive is potentially facing a much higher pay bill for hospital consultants after withdrawing its appeal against a pay award for the doctors, the cost of which could have hit €700m.
The case had been due to be heard in the High Court tomorrow.
The case centred on new consultant contracts introduced in 2008, under which they would get pay rises in exchange for giving up private practice.
While the first half of the increase was paid, the second half was withheld by then minister for health Mary Harney due to the financial crisis.
Two consultants, Dr Thomas Hogan and Dr John McDermott, who had given up private practice but never got the pay rise, took a case to the Employment Appeals Tribunal.
In January 2015, they succeeded in their claim.
Because the case applied to many more consultants, the cost had been estimated at up to €700m, given the entitlement to years of retrospective payment, and the potential for court interest to be awarded.
However, sources had consistently said that the final outcome was likely to be somewhat lower.
The HSE had appealed the EAT ruling to the High Court, but just ahead of tomorrow's hearing, the appeal has been withdrawn.
The Irish Hospital Consultants Association has welcomed the HSE decision to withdraw its appeal of the 2015 EAT determinations in favour of Dr Hogan and Dr McDermott.
While some sources said this meant the EAT ruling would have to be implemented in full for all affected consultants, it is not yet clear whether there has been a negotiated compromise.
The HSE said it cannot comment on court cases.
Informed sources have told RTÉ that the process for other consultants affected by the Hogan/McDermott ruling to apply for similar payments had not yet been determined, and it is unclear how many who had not formally taken cases will actually receive such payments.