The city has coughed up $540 million in payouts related to improper police actions since 1998 — and taxpayer cost for such cases hit a record high last year.

In 1998, the city paid lawsuit settlements or judgments to 571 claimants who accused the NYPD of bad behavior. That figure more than doubled to 1,265 in 2008, according to Law Department data.

The amount of money shelled out each year also doubled in the past decade. The city paid $31.8 million in 1998, and $66.4 million in 2008.

“What it reveals is a steadily increasing problem of police wrongdoing over the course of the Bloomberg administration,” said Donna Lieberman, executive director of the New York Civil Liberties Union. “Both in terms of the number of incidents and the cost of wrongdoing, the trend is in the wrong direction.”

She said the rise in payouts paralleled a rise in the number of police-abuse complaints made to the Civilian Complaint Review Board.

But NYPD spokesman Paul Browne said payouts aren’t always a reflection of police misconduct.

“Actions in which the police are innocent of wrongdoing, and in which the city admits none, nonetheless frequently result in settlements which enrich plaintiffs and their lawyers at monetary expense to the public and at the expense of the NYPD’s good name,” Browne said.

The 10,625 payouts made over the last 10 years stemmed from lawsuits accusing the NYPD of false arrest, malicious prosecutions, excessive force or other misconduct. Some of these payouts came in cases filed more than a decade ago.

“It is important to note that most of the payouts are for incidents that arose in the past and are not reflective of current trends,” city Law Department spokeswoman Elizabeth Thomas said.

* The biggest settlement in 2008 was $3.4 million to Hector Gonzalez, who sued the city in 2004 after spending more than six years in prison on a wrongful murder conviction.

He was sent to the slammer in 1996 at age 17 for the slaying of a Brooklyn bar patron a year before.

The conviction was thrown out in April 2002 after evidence emerged in an FBI investigation into the Latin Kings gang, and a DNA test exonerated Gonzalez.

According to his lawyer, Nick Brustin, an NYPD detective and lieutenant investigating the murder used unreliable witnesses and withheld results of a lineup that would have helped clear Gonzalez, now 32.

Brustin, who specializes in civil-rights matters involving police, said cases like Gonzalez’s rarely lead to departmental changes or investigations of cops.

“We see no suggestion that the Police Department is looking at what is happening in some very serious civil-rights cases in terms of addressing problem officers, policing procedures and police training,” Brustin said.

jfanelli@nypost.com