Two surgically removed legs found at a rubbish dump in Newcastle came from two different people, the ABC understands.
Craig Lamberton, director of hazardous incidents at the Environmental Protection Authority said the legs were not legally disposed of.
“Clinical waste needs to be treated through a sterilisation process … so that it’s sterile,” Mr Lamberton said.
“It has to go to a specialist treatment facility before any waste can go to landfill. Clearly this hasn’t happened in the case at Summerhill.”
Mr Lamberton said the reason such materials were treated so securely was because they could be infectious.
He said he could not confirm whether the legs have come from different people and whether the people who they came from were still alive.
“Our investigation will be primarily, what’s the chain of events that lead this to turning up in landfill.
"And there are a number of parties that play a role here, the medical facility, the transporter, the treatment facility and the landfill, so there's potentially a number of parts of this chain where this has broken down.
"There's only a certain number of people who are licensed to transport clinical waste and also what is a dangerous good and often hospitals have a contractor with a specialist contractor.
"Once we figure out where they've come from it shouldn't be hard to find out who was responsible for transporting them."
Police have confirmed their discovery is not related to a criminal matter.
Corporations that unlawfully dispose of medical waste can face fines of up to $1 million.
The New South Wales Opposition has demanded answers from the State Government, saying the protocol surrounding the disposal of limbs appears to have broken down.
Disposal of legs 'just repulsive'
Lorraine Long from the Medical Error Action Group said she was worried that cost-cutting within the health system could be to blame for the mix-up.
"The outsourcing of responsibilities is not the way to go. It's terrible," Ms Long said.
"You know I feel for the tip workers and whoever's limbs they are, because if those patients are now deceased, well it's disrespectful.
"You know even a family member reading the news or listening to it and finding out their limbs were found and they've got a loved one who's just had an amputation I mean it is just repulsive."
A spokeswoman for NSW Health said its waste management guidelines assist public health care facilities to comply with environmental protection and waste disposal legislation.
She said the directive provides the rules and regulations that public health facilities and the private contractors they engage are legally required to comply with when disposing of clinical waste, which includes human body parts.
"All contractors engaged by our public health care facilities to carry out the disposal of clinical waste must be licensed by the EPA," she said.
"Penalties for non-compliance with environmental protection and waste disposal legislation are issued by the EPA."
An EPA spokeswoman said NSW law requires all clinical waste to be correctly labelled and stored in a secure bag or container and not left unattended.
"Importantly this type of waste, like asbestos can only be taken to certain landfills that are specially licensed to receive, store and/or dispose of clinical waste.
"Clinical waste must be sent to a special treatment facility, such as an autoclave, sterilising facility or clinical waste incinerator."