"I know that he is standing down from his role today because he believes it is in the best interest of rebuilding public confidence in the wake of the issues which have arisen in CervicalCheck (Ireland's national screening programme)".
Health Minister Simon Harris has launched an inquiry into the controversy.
It emerged in the days after the settlement that after the audit revealed that there may be a problem with test results relating to 208 women - however only 36 were informed.
While screening tests are not 100% accurate and there are acknowledged risks on the possibility of incorrect results, the fact the majority of the affected patients were not told of the outcome of the audit has prompted a wave of public anger.
At least 17 women wrongly given the all-clear following their smear tests have since died.
Tony O'Brien told that committee that he became aware of the Vicky Phelan case on a news app at the time the case was settled last month.
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At the beginning, we were thinking that the target was to stay up, and I can read about a lot of managers now saying, "Great because we are safe", but we were safe five games before, so that is incredible .
Tony O'Brien admitted to receiving memos outlining how CervicalCheck was in the process of disclosing details of audits of cervical smears, how clinicians rather than patients were being told, and warning of headlines such as "screening did not diagnose my cancer".
In 2014 she was diagnosed with cancer but only told of the false negative last September.
"That is the most devastating part of this", he said. "I'm dying when I don't need to die".
The Cabinet on Friday agreed a support package for the women caught up in the controversy.
There are 10 legal challenges similar to Ms Phelan's in the pipeline.
"I don't want any of them to go to court", he said. The HSE introduced a policy of open disclosure in 2013.
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The HSE forwarded three 2016 memos to the Irish parliament's Public Accounts Committee on Thursday as members probed the growing controversy around the misinterpreted smear tests.
The HSE boss said he did not hear the piece but would listen to it later. He told the PAC that he could not say whether he had seen it.
The Herald understands the Department of Health is to issue medical cards to the women and provide some practical supports, like transport for hospital appointments.
However, a spokesman said they were only relayed to certain officials and none were brought to the attention of any serving health minister. It said that the CervicalCheck programme was prepared for such media coverage.
"I don't want any obstacle to the truth coming out here, I think that's absolutely essential".
He added: "The response to the crisis has been shocking in my view, it has been very badly managed".
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In the meantime, United have doubts over Romelu Lukaku and Anthony Martial for subsequent Saturday's FA Cup Ultimate in opposition to Chelsea .
A special cabinet meeting due to be held in Monaghan tomorrow has been moved back to Dublin so the Taoiseach can continue to deal with the scandal.