MEDICAL PRACTICE PARTNERSHIP AGREEMENT

(Alabama)

[// GUIDANCE: This template is drafted as a Registered Limited Liability Partnership (“RLLP”) for physicians licensed in the State of Alabama. Replace bracketed text with deal-specific information and delete all guidance comments before execution.]

TABLE OF CONTENTS

1. Document Header
2. Definitions
3. Operative Provisions
4. Representations & Warranties
5. Covenants & Restrictions
6. Default & Remedies
7. Risk Allocation
8. Dispute Resolution
9. General Provisions
10. Execution Block

1. DOCUMENT HEADER

1.1 Parties

This Medical Practice Partnership Agreement (the “Agreement”) is made and entered into as of [Effective Date] (the “Effective Date”) by and among:

• [Partner A Full Legal Name], M.D., Alabama License No. [____] (“Partner A”); and
• [Partner B Full Legal Name], M.D., Alabama License No. [____] (“Partner B” and, together with Partner A, the “Partners”).

[Additional physician partners may be added in the signature block.]

1.2 Recitals

A. The Partners are each duly licensed to practice medicine in the State of Alabama under the Alabama Medical Practice Act, Ala. Code § 34-24-50 et seq.
B. The Partners desire to form and operate a registered limited liability partnership for the lawful purpose of practicing medicine in Alabama in compliance with all applicable licensing requirements, corporate practice restrictions, and fee-splitting rules.
C. The Partners are entering into this Agreement to set forth their respective rights, duties, and obligations with respect to the Practice (as defined below) and to allocate profits, losses, risks, and liabilities among themselves.

NOW, THEREFORE, in consideration of the mutual covenants herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Partners agree as follows:

1.3 Jurisdiction & Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the State of Alabama (the “Governing Law”), without regard to its conflict-of-laws principles.

2. DEFINITIONS

For purposes of this Agreement, the following capitalized terms have the meanings set forth below. Terms defined in the singular include the plural and vice versa. Section references are to this Agreement unless otherwise noted.

“AAA” means the American Arbitration Association.
“Adjusted Basis” has the meaning given in IRC § 1011.
“Affiliate” means, with respect to any Person, another Person that directly or indirectly controls, is controlled by, or is under common control with such Person.
“Capital Contribution” means the total amount of cash and the fair market value of any property contributed to the Partnership by a Partner, as set forth on Schedule A.
“Fee-Splitting Prohibitions” means Ala. Code § 34-24-360(18) and any similar rule or advisory opinion of the Alabama Board of Medical Examiners prohibiting remuneration for referrals or the division of fees with non-physicians.
“Managing Partner” has the meaning set forth in Section 3.6.
“Malpractice Limits” means the per-claim and aggregate limits of professional liability insurance required under Section 7.3.
“Medical Licensure Commission” means the Medical Licensure Commission of Alabama.
“Non-Defaulting Partner” has the meaning set forth in Section 6.3.
“Partnership” or “Practice” means [Practice Legal Name, LLP], an Alabama Registered Limited Liability Partnership organized pursuant to Ala. Code § 10A-8A-10.
“Person” means any individual, corporation, partnership, limited liability company, trust, or other entity.
“Regulatory Body” means the Alabama Board of Medical Examiners, the Medical Licensure Commission, the U.S. Department of Health & Human Services (including CMS and OIG), and any successor agencies.

[// GUIDANCE: Add or remove defined terms as needed to fit the transaction.]

3. OPERATIVE PROVISIONS

3.1 Formation; Name; Principal Office

3.1.1 Formation. The Partners hereby form the Practice as a Registered Limited Liability Partnership under the Alabama Partnership Act (Ala. Code § 10A-8A-1.01 et seq.) by filing a Statement of Qualification with the Alabama Secretary of State.
3.1.2 Name. The business of the Partnership shall be conducted under the name [Practice Legal Name, LLP] or such other name as the Partners may unanimously approve, provided that such name complies with Ala. Code § 34-24-57.
3.1.3 Principal Office. The principal office of the Practice shall be located at [Address], or such other location within Alabama as the Partners may determine.

3.2 Purpose & Scope

The purpose of the Partnership is to own and operate a medical practice engaged in [specialty, e.g., family medicine], and to perform any lawful activities incidental or ancillary thereto, all in compliance with (a) the Alabama Medical Practice Act and related regulations, (b) Corporate Practice of Medicine restrictions, and (c) Fee-Splitting Prohibitions.

3.3 Term

The Partnership shall commence on the Effective Date and shall continue until terminated in accordance with Section 6 or as otherwise provided by Governing Law.

3.4 Capital Contributions; Ownership Interests

3.4.1 Initial Contributions. On the Effective Date each Partner shall contribute the Capital Contribution set forth opposite such Partner’s name on Schedule A.
3.4.2 Percentage Interests. The Partners’ respective Percentage Interests in profits, losses, and distributions shall be as set forth on Schedule A (the “Percentage Interests”).
3.4.3 Additional Capital. No Partner shall be required to make additional Capital Contributions without such Partner’s written consent. If additional capital is required, the Partners shall determine the amount, terms, and method of contribution by unanimous vote.

3.5 Allocation of Profits & Losses; Distributions

3.5.1 Allocations. Profits and losses shall be allocated to the Partners pro rata in accordance with their Percentage Interests, subject to compliance with the Fee-Splitting Prohibitions.
3.5.2 Tax Distributions. The Partnership shall make quarterly tax distributions to each Partner sufficient to cover estimated federal and state income tax liabilities attributable to Partnership income.
3.5.3 Other Distributions. Distributions other than tax distributions shall be made at such times and in such amounts as the Partners may approve, provided that such distributions do not violate the Partnership’s covenants with lenders or insurers.

3.6 Management & Voting

3.6.1 Managing Partner. [Name] is hereby appointed the initial Managing Partner, with authority to act for and bind the Partnership in the ordinary course of business, subject to the limitations set forth herein.
3.6.2 Major Decisions. The following matters require unanimous Partner approval: (a) admission or removal of a Partner; (b) sale or merger of the Practice; (c) amendment of this Agreement; (d) incurrence of indebtedness exceeding [Dollar Threshold].
3.6.3 Meetings; Quorum. Regular meetings shall be held at least [frequency]. A quorum consists of Partners holding more than 50% of the Percentage Interests.

3.7 Restrictions on Transfer

No Partner may sell, assign, pledge, or otherwise transfer any Partnership interest, except (a) to another Alabama-licensed physician approved by the non-transferring Partners, or (b) as otherwise permitted by Section 5.6 (Buy-Sell). Any attempted transfer in violation of this Section is void ab initio.

3.8 Employment of Partners; Compensation

Each Partner shall devote [Full-Time/Part-Time] professional efforts to the Practice and shall be compensated under the productivity-based compensation plan attached as Schedule B, which is designed to comply with all Stark Law, Anti-Kickback Statute, and Fee-Splitting Prohibitions.

3.9 Books & Records; Accounting

Books and records shall be maintained in accordance with GAAP on a fiscal year ending [Fiscal Year End]. Each Partner shall have the right to inspect and copy the Partnership’s books at reasonable times upon [Number] business days’ notice.

4. REPRESENTATIONS & WARRANTIES

Each Partner represents, warrants, and covenants to the Partnership and to the other Partners that, as of the Effective Date and continuing throughout the Term:

4.1 Licensure & Good Standing. Such Partner holds an active, unrestricted license to practice medicine in Alabama, is in good standing with all Regulatory Bodies, and has never had a license suspended, revoked, or restricted except as disclosed on Schedule C.

4.2 No Conflicts. Execution and performance of this Agreement will not violate any other agreement, court order, or law applicable to such Partner.

4.3 Authority. Such Partner has full power and authority to enter into and perform this Agreement.

4.4 Compliance with Law. Such Partner will at all times comply in all material respects with the Alabama Medical Practice Act, HIPAA, Medicare and Medicaid regulations, and any other laws applicable to the Practice.

4.5 Survival. The representations and warranties in this Article 4 shall survive the execution of this Agreement and any termination of a Partner’s interest for a period of [two] years, except for Section 4.1, which shall survive indefinitely.

5. COVENANTS & RESTRICTIONS

5.1 Maintenance of Licensure

Each Partner shall maintain an active, unrestricted Alabama medical license and shall complete all continuing medical education required by Ala. Code § 34-24-381.

5.2 Standard of Care

Each Partner shall render medical services in accordance with the generally accepted standard of care for the Partner’s specialty, as such standard may evolve.

5.3 Compliance Program

The Practice shall maintain a written compliance plan consistent with OIG guidelines and shall designate a Compliance Officer.

5.4 Non-Competition

For [two (2)] years following withdrawal or expulsion, a Partner shall not own, manage, or practice medicine within a radius of [15] miles of any Practice office, except as prohibited by Ala. Code § 8-1-1.

[// GUIDANCE: Non-compete enforceability is fact-specific under Alabama law. Consult local counsel on scope and duration.]

5.5 Non-Solicitation

For [two (2)] years after withdrawal, a Partner shall not solicit or hire any Practice employee or solicit any patient of the Practice, except pursuant to patient choice or insurance requirements.

5.6 Buy-Sell & Mandatory Redemption

Upon the occurrence of (a) death, (b) permanent disability exceeding [180] consecutive days, (c) retirement upon [60] days’ prior notice, (d) a licensure action resulting in suspension of 30 days or more, or (e) a material breach uncured as set forth in Section 6.2, the Partnership or the remaining Partners shall have the option (or, in the case of (a) or (d), the obligation) to purchase the withdrawing Partner’s entire interest at “Fair Market Value” as defined in Schedule D.

6. DEFAULT & REMEDIES

6.1 Events of Default

The following constitute an “Event of Default”:
a. Loss, suspension, or restriction of a Partner’s medical license in Alabama for more than [30] days;
b. Filing of a voluntary or involuntary bankruptcy petition by or against a Partner that is not dismissed within [60] days;
c. Conviction of a Partner of a felony or any crime involving moral turpitude;
d. Material breach of this Agreement not cured within the period specified in Section 6.2.

6.2 Notice & Cure

The non-defaulting Partner(s) shall give written notice describing the Event of Default. The defaulting Partner shall have [15] days to cure monetary defaults and [30] days to cure non-monetary defaults, if curable.

6.3 Remedies

If an Event of Default is not timely cured, the Partnership or the Non-Defaulting Partner(s) may (a) suspend the defaulting Partner’s voting and distribution rights, (b) initiate a mandatory buy-out under Section 5.6, (c) seek injunctive relief, and/or (d) pursue any other remedy available under Governing Law.

6.4 Attorneys’ Fees

The prevailing party in any dispute arising under this Agreement shall be entitled to recover reasonable attorneys’ fees and costs.

7. RISK ALLOCATION

7.1 Indemnification (Malpractice)

7.1.1 Partner Indemnity. Each Partner (“Indemnifying Partner”) shall indemnify, defend, and hold harmless the Partnership and the other Partners (each, an “Indemnified Party”) from and against any Losses arising out of or relating to (a) the Indemnifying Partner’s professional negligence or malpractice, or (b) any breach of this Agreement by the Indemnifying Partner.
7.1.2 Advancement. The Indemnifying Partner shall promptly advance defense costs but may seek reimbursement if not ultimately liable.

7.2 Limitation of Liability

Except for (a) malpractice claims covered by required insurance, (b) willful misconduct, or (c) fraud, each Partner’s aggregate liability under this Agreement shall not exceed the lesser of (i) the Malpractice Limits in effect at the time of the event giving rise to liability, or (ii) such Partner’s Capital Account balance.

7.3 Insurance

7.3.1 Malpractice Insurance. Each Partner shall maintain, at such Partner’s own expense, occurrence-based professional liability insurance (or claims-made with tail) with minimum limits of [\$1,000,000 per claim / \$3,000,000 aggregate] or such higher limits as the Partners may determine.
7.3.2 General & Cyber Insurance. The Practice shall maintain general liability, workers’ compensation, and cyber liability coverage in commercially reasonable amounts.

7.4 Force Majeure

No Partner shall be liable for any failure to perform if such failure results from events beyond the Partner’s reasonable control, including acts of God, pandemic, or changes in applicable law; provided that the affected Partner gives prompt notice and resumes performance as soon as practicable.

8. DISPUTE RESOLUTION

8.1 Governing Law & Forum

Subject to Section 8.2, any suit, action, or proceeding arising out of or relating to this Agreement shall be instituted exclusively in the Circuit Court of [County] County, Alabama (the “Designated Court”), and each Party irrevocably submits to the jurisdiction of such court.

8.2 Arbitration

8.2.1 Scope. Except for equitable proceedings under Section 8.3, any dispute, claim, or controversy arising out of or relating to this Agreement shall be resolved by binding arbitration administered by the AAA under its Commercial Arbitration Rules then in effect.
8.2.2 Seat; Law; Award. The arbitration shall take place in [City, Alabama]. The arbitrator shall apply Alabama law. Judgment on the award may be entered in the Designated Court.

8.3 Injunctive Relief

Notwithstanding Section 8.2, either Party may seek temporary, preliminary, or permanent injunctive relief or specific performance in the Designated Court to protect confidential information, enforce non-competition obligations, or preserve the status quo pending arbitration.

8.4 Jury Trial Waiver

[OPTIONAL – STRIKE IF NOT USED] EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY IN ANY ACTION RELATING TO THIS AGREEMENT.

9. GENERAL PROVISIONS

9.1 Amendments. This Agreement may be amended only by a written instrument signed by all Partners.

9.2 Waiver. No waiver by any Party of any breach shall be deemed a waiver of any other or subsequent breach.

9.3 Assignment. No Partner may assign this Agreement or any rights hereunder without the prior written consent of all other Partners and compliance with Section 3.7.

9.4 Successors & Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective permitted successors and assigns.

9.5 Severability. If any provision is held invalid or unenforceable, the remaining provisions shall remain in full force, and the invalid provision shall be reformed to the minimum extent necessary to effect the Parties’ intent.

9.6 Entire Agreement. This Agreement, together with the Schedules hereto, constitutes the entire agreement among the Parties with respect to the subject matter, and supersedes all prior agreements, oral or written.

9.7 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which is deemed an original, and all of which together constitute one instrument. Signatures delivered via PDF or electronic means shall be deemed original signatures.

9.8 Notices. All notices shall be in writing and delivered (a) by hand with signed receipt, (b) by certified mail, return receipt requested, or (c) by nationally recognized overnight courier, to the addresses set forth on Schedule E (or such other address as a Party may designate). Notice is effective upon receipt.

9.9 Further Assurances. Each Partner shall execute and deliver such further documents and take such further actions as may be reasonably necessary to carry out the intent of this Agreement.

10. EXECUTION BLOCK

IN WITNESS WHEREOF, the undersigned Partners have executed this Medical Practice Partnership Agreement as of the Effective Date.

[// GUIDANCE: Insert additional signature lines for each additional Partner.]

NOTARIZATION (If Required)

State of Alabama

County of [County]

On this ___ day of _, 20_, before me, a Notary Public in and for said state, personally appeared _____, proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to this instrument, and acknowledged that he/she/they executed the same.

____

Notary Public
My Commission Expires: ___

SCHEDULES

Schedule A – Capital Contributions & Percentage Interests
Schedule B – Partner Compensation Plan
Schedule C – Licensure & Disciplinary History (if any)
Schedule D – Fair Market Value Determination Methodology
Schedule E – Notice Addresses

[// GUIDANCE: Always attach or prepare the corresponding schedules before circulation.]