(TORONTO) June 29, 2005 -- MDS Diagnostic Services has come to an agreement with the New York Attorney General’s office to resolve a limited number of billing errors caused when its former business MDS Hudson Valley Laboratories changed computer billing systems.

Only patients of MDS Hudson Valley Laboratories residing in New York state were affected.

Corrective measures were put in place by MDS Hudson Valley Laboratories once we identified the errors and a process has been established whereby patients can receive a refund for overpayments.

MDS Diagnostic Services will be running ads, which inform patients that in limited situations, we billed insured patients who reside in New York State in instances where their Health Maintenance Organization (HMO) or health plan should have paid the bill but did not or where an HMO or health plan had already paid the bill.

MDS estimates the impact of reimbursing patients is not financially material.

About MDS Diagnostic Services

MDS Diagnostic Services, a business unit of MDS Inc. (TSX: MDS, NYSE: MDZ), is a leading provider of laboratory testing and management services. MDS Inc. has more than 9,000 highly skilled people in 27 countries. MDS Inc. provides a diverse range of superior products and services to increase its customers’ speed, precision and productivity in the drug development and disease diagnosis processes. MDS Inc. is a global, values-driven health and life sciences company, recognized for our reliability and collaborative relationships as we help create better outcomes in the treatment of disease. Find out more at www.mdsintl.com or by calling 1-888-MDS-7222, 24 hours a day.