The patients were recalled following an independent review of patient notes relating to the work of a single consultant neurologist, Dr Michael Watt.
The inquiry panel will be chaired by Brett Lockhart QC.
In a statement, the department of health said: “Discussions have also been initiated with the Faculty of Medical Leadership and Management on identifying a panel member with suitable clinical leadership expertise.
“The inquiry will review the process initiated by the Trust in December 2016, in relation to concerns raised about the clinical practice of Dr Michael Watt. This process resulted in the patient recall announced last week.
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“In addition, the panel will assess whether any complaints or concerns relating to Dr Watt prior to December 2016 should have provided grounds for earlier intervention.”
Department of Health Permanent Secretary Richard Pengelly said: “The focus since last week has rightly been on establishing a robust patient recall process. That remains the first priority.
“However, it is clear that a rigorous review is also required – given the seriousness of the situation and the impact on patients. The public needs to be assured that this issue has been properly and appropriately handled by the Trust, and that any lessons for the future are learned.”
He added: “I am indebted to Mr Lockhart for agreeing to lead this inquiry panel and undertake this important work.”
A spokesperson for the department of health added: “The Department has already commissioned the RQIA to undertake a review of governance of outpatient services in the Belfast Trust with a particular focus on neurology services. This review will then be extended as part of its rolling programme of inspections to cover all five HSC Trusts in NI.
“The Department has also asked the RQIA to commission a parallel piece of work to ensure that the records of all patients or former patients of Dr Watt who have died over the past ten years are subject to expert review.”
SDLP Deputy Leader Nichola Mallon welcomed the announcement.
The North Belfast MLA said: “The decision by the Department of Health to establish an Independent Inquiry Panel to review the recall of neurology patients within the Belfast Trust is most welcome. In particular, it is important that we will now have openness and transparency about what exactly happened within this area of our health service.
“Patients and their families, and the general public, will be relieved to see that the Department has stepped up. It is absolutely vital that this review establishes exactly how this was allowed to happen and what changes are required to prevent the possibility of this happening again.”
She continued: “It is increasingly becoming clear to me from my engagement with patients and others, that there are four issues at the heart of this situation that require investigation: the conduct of an individual doctor, clinical governance arrangements within the Belfast Trust, regulation of private healthcare providers and the serious and unsustainable pressures on our neurology services.
“Any open and independent review of the recall must examine the role of those with statutory responsibilities and the role of private providers. It is critical that the voice of patients, whose lives have been turned upside down as a result of this scandal, are heard.”
She added: “We need to ensure that patient and public confidence and trust in our health service is restored”.