Many classes of images contain spatial regions which are more important than other regions. Compression methods capable of delivering higher reconstruction quality for important parts are attractive in this situation. For medical images, only a small portion of the image might be diagnostically useful, but the cost of a wrong interpretation is high. Hence, Region Based Coding (RBC) technique is significant for medical image compression and transmission. Lossless compression schemes with secure transmission play a key role in telemedicine applications that help in accurate diagnosis and research. In this paper, we propose lossless scalable RBC for Digital Imaging and Communications in Medicine (DICOM) images based on Integer Wavelet Transform (IWT) and with distortion limiting compression technique for other regions in image. The main objective of this work is to reject the noisy background and reconstruct the image portions losslessly. The compressed image can be accessed and sent over telemedicine network using personal digital assistance (PDA) like mobile.