FONAR (FONR) UPRIGHT MRI Customer Wins Jury Decision in Federal Court

MELVILLE, NY — (Marketwire) — 12/13/10 — FONAR Corporation (NASDAQ: FONR), The Inventor of MR Scanning™, announced today that a provider of outpatient diagnostic services (a FONAR customer) and several Stand-Up MRI diagnostic imaging professional corporations (PCs) received a jury verdict in their favor in an anti-trust lawsuit against CareCore National, LLC, a radiology benefits management (RBM) company (www.carecorenational.com).

This antitrust lawsuit involved CareCore National’s exclusion of the plaintiffs, all of them providers of MRI services using Stand-Up MRI scanners (FONAR UPRIGHT® Multi-Position™ MRIs), from utilization by its member subscribers. CareCore Radiology, a division of CareCore National, covers more than 30 million member subscribers in all 50 states. The diagnostic service provider and the PCs were represented by Constantine Cannon LLP, New York, NY, (www.constantinecannon.com).

After more than a two-week trial, the verdict was reached November 30, 2010 in the U.S. District Court for the Eastern District of New York. The case is Stand-Up MRI v. CareCore National, E.D.N.Y. Case No: 08 Civ. 2954 (LDW) (ETB). The eight members of the jury were unanimous in their decision and awarded over $11 million in damages to the diagnostic service provider and the PCs in the case, which are to be trebled by law. The total judgment with costs and attorney fees is expected to be close to $40 million.

In a press release, (http://www.prnewswire.com/news-releases/constantine-cannon-attorneys-win-important-healthcare-antitrust-jury-trial-against-carecore-national-llc-111128319.html) lead Constantine Cannon trial attorney Matthew Cantor said: “This verdict is not just important for my clients, but for patients everywhere. The evidence in this case showed that even CareCore considered the Upright MRI to be medically necessary and that, nonetheless, CareCore and its owners denied patients the ability to benefit from these important diagnostic procedures. The actions of benefits managers (RBMs) that are owned and controlled by physicians, like CareCore, must be scrutinized to ensure that patient welfare is not compromised. Constantine Cannon expects that the defendants will attempt to overturn the jury award either in post-trial motion practice or on appeal. If that occurs, Constantine Cannon will vigorously defend the decision of the jury.”

“The jury found that CareCore, in league with New York-area radiologists and radiology practices that owned and/or governed CareCore, conspired to unreasonably restrain trade in the market for commercially-insured outpatient radiology procedures. The jury also found that these restraints harmed the plaintiffs — several New York radiology practices and their medical management company — that offer unique and medically necessary Upright MRI services. The Upright MRI is the only MRI that can scan patients in the weight-bearing positions that patients actually feel their pain. By doing so, Upright MRIs diagnose patient ailments, including those related to the spine, that no other MRI can,” said Cantor.

Raymond Damadian, president and founder of FONAR said, “We are pleased that the Federal Court and Jury understands the medical necessity of the FONAR UPRIGHT® Multi-Position™ MRI aka STAND-UP® MRI. This is important for FONAR, its customers, future customers and particularly the patients who need the UPRIGHT® MRI so they can be correctly diagnosed and not be given the wrong treatment which often involves surgery. We expect this to help those patients across our nation who have been previously denied these critical examinations by the RBMs.”

“FONAR’s UPRIGHT® MR technology is vital to patient needs nationwide,” said Dr. Damadian. “Back pain is the second most common reason for visiting the doctor’s office after the common cold. Close to one million spine surgeries are performed each year, but the outcomes are not good with a failure rate that varies from 10% to 40% depending on the reported study (1). Alf Nachemson, MD refers to the saddest group of these patients, those who have undergone 4, 5, or 6 spine surgeries as “multiply operated surgical cripples” (2). The surgical failure is commonly the result of operating on the wrong spinal segment (i.e. not the one responsible for the patient’s pain). This occurs because the origin of the pain is often attributed to the wrong degenerative change in the spine when the patient is imaged on a recumbent-only MRI. Degenerative changes in the adult spine are frequently multiple in number. The suspected pain generating anatomy is conventionally identified from recumbent (conventional) MRI images while the patient’s pain often occurs only when the patient is upright and when the pathology generating it is visible only when the patient is upright and fully weight-loaded.”

Dr. Damadian continued, “The FONAR UPRIGHT® Multi-Position™ MRI enables the patient to place himself in the position that generates his pain so that an MRI picture can be taken in the same position that generated the patient’s pain. Correctly identifying the pain generating pathology markedly improves patient surgical outcomes. In addition, it enables the surgeon to see ALL the pathology he has to address, not just the single position non-weight-bearing image provided by the conventional MRI. This enables the surgeon to see the full extent to which the disk herniation of his patient increases when he/she flexes or extends, or the extent to which the patient’s vertebra is sliding back and forth with body position and generating pain. Approximately 1 million spine surgeries are performed in the U.S. each year and technology to improve the surgical outcomes for these patients is a serious need.”

“In addition, there are a wide range of other needs that patients have for FONAR’s UPRIGHT® Multi-Position™ MR imaging technology,” said Dr. Damadian. “Patients who have been hospitalized, for example, with congestive heart failure, cannot lie down. In the absence of UPRIGHT ® MRI these patients are unable to receive MRI examinations when they are needed.”

“Patients with scoliosis, which most commonly arises for the first time in young adolescent girls, have been reported by the National Cancer Institute (3) to experience a 70% higher incidence of breast cancer as adults than the non-scoliotic population. The increased incidence is attributed to the multiple annual chest x-rays (2-3 times per year) needed to monitor the child’s scoliosis until adulthood in order to assure satisfactory treatment.” Dr. Damadian added, “the FONAR UPRIGHT® MRI provides the same necessary vertebral angle (“Cobb angle”) measurements as the x-ray (plus the needed measurements of vertebra rotation not supplied by x-ray), thereby avoiding the annual radiations of the x-ray procedure and eliminating the danger of subsequent adult breast cancer.”

“Women patients, for example, as a result of the inherent trauma of childbirth to their pelvic floor anatomy, will commonly suffer the consequences of PFD (pelvic floor dystrophy) later in life. The symptoms of PFD are cystic prolapse (“falling urinary bladder”) and its chronic cystitis symptoms of urinary frequency, burning on urination, fever, and if unaddressed, chronic kidney inflammation (pyclonephritis). The patient must be upright to see it. It commonly returns to its normal position when the patient is recumbent and therefore is not diagnosed by the patient’s physician who examines her in the recumbent position. It affects 10 million women. The UPRIGHT® MRI readily visualizes the fallen bladder when these patients are upright, so that the surgeon has full image visualization of the anatomy that has to be repaired.

“Another serious present need for the FONAR UPRIGHT® Multi-Position™ MRI is the rising body of patients who are sustaining dislocations of the cervical spine from automobile collision whiplash injuries of the head and neck. The UPRIGHT® MRI is needed to assess the extent to which the brain has been dislocated [descent of the tonsils of the cerebellum] into the opening in the bottom of the skull (foramen magnum). This critical assessment of the extent of brain herniation into the opening at the base of the skull (cerebellar tonsil ectopia, or CTE) can only be determined with the patient in the upright position so that the surgical repair of this herniation and the patient’s “drop attacks” can be eliminated. (4)”

(1) The Failed Spine, M. Szpalski and R. Gunzburg, eds., Lippincott Williams & Wilkins, 2005, p. 123.
(2) Alf L. Nachemson, MD, “The Lumbar Spine An Orthopaedic Challenge”, Spine, Vol. 1, Number 1, March 1976, p. 65.
(3) National Cancer Institute, “Scientists Find Link Between Pre-1970’s Diagnostic X-rays for Scoliosis and Breast Cancer Mortality,” www.cancer.gov, 8/15/2000. “Breast Cancer Mortality After Diagnostic Radiography: Findings from the U.S. Scoliosis Cohort Study”, Michele Morin Doody, et al., Spine, Aug. 15, 2000, Vol. 25, No. 16.
(4) Michael D. Freeman, et al., Brain Injury, July 2010:24(7-8):988-994.

About Constantine Cannon LLP

Constantine Cannon LLP represented the plaintiffs in the case. They have deep expertise in practice areas that include antitrust and complex commercial litigation, government relations, employment matters, securities and e-discovery. With offices in New York, NY and Washington, DC, the firm’s antitrust practice is among the largest in the nation, with more than 30 attorneys representing both plaintiffs and defendants in complex antitrust litigation.

For investor and other information visit: www.fonar.com.

UPRIGHT® and STAND-UP® are registered trademarks and The Inventor of MR Scanning™, Full Range of Motion™, pMRI™, Dynamic™, Multi-Position™, True Flow™, The Proof is in the Picture™, Spondylography™ Spondylometry™ and Upright Radiology™ are trademarks of FONAR Corporation.

This release may include forward-looking statements from the company that may or may not materialize. Additional information on factors that could potentially affect the company’s financial results may be found in the company’s filings with the Securities and Exchange Commission.

Contact:
Daniel Culver
FONAR Corporation
Tel: 631-694-2929
Fax: 631-390-1709
http://www.fonar.com
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