MEDICAL PRACTICE PARTNERSHIP AGREEMENT

(Arizona Template)

[// GUIDANCE: This document is drafted to comply with Arizona partnership law, Arizona’s Medical Practice Act, and the State’s fee-splitting and corporate-practice restrictions. Insert or delete bracketed language as appropriate for the specific transaction.]

TABLE OF CONTENTS

I. Document Header
II. Definitions
III. Operative Provisions
  1. Formation; Purpose; Term
  2. Capital Contributions; Capital Accounts
  3. Management & Voting
  4. Distributions; Compensation; Allocation of Profits and Losses
  5. Practice Operations & Compliance
IV. Representations & Warranties
V. Covenants & Restrictions
VI. Default & Remedies
VII. Risk Allocation (Indemnification; Liability Limitation; Insurance)
VIII. Dispute Resolution
IX. General Provisions
X. Execution Block

I. DOCUMENT HEADER

This Medical Practice Partnership Agreement (this “Agreement”) is entered into as of [EFFECTIVE DATE] (the “Effective Date”) by and among the undersigned parties (each a “Partner,” collectively, the “Partners”).

A. Recitals
1. The Partners are each physicians duly licensed and in good standing under the Arizona Medical Practice Act, A.R.S. Title 32, Chapter 13 (the “Medical Practice Act”).
2. The Partners desire to associate as a partnership (the “Practice”) for the purpose of practicing medicine and providing related clinical and ancillary services in the State of Arizona in strict compliance with Applicable Law (as defined below).
3. The Partners enter into this Agreement to set forth their rights, duties, and obligations and to provide for the governance and management of the Practice.

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:

II. DEFINITIONS

For purposes of this Agreement, capitalized terms have the meanings set forth below:

“Act” means the Arizona Uniform Partnership Act, A.R.S. Title 29, Chapter 8, as amended.
“Applicable Law” means all federal, state, and local statutes, regulations, rules, and professional standards governing the Practice, including but not limited to the Medical Practice Act; fee-splitting prohibitions under A.R.S. § 32-1401 et seq.; federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)); and the federal physician self-referral law (42 U.S.C. § 1395nn).
“Capital Account” means, with respect to each Partner, the Partner’s capital account maintained in accordance with Section III.2.
“Capital Contribution” means the total amount of cash, property, or services contributed by a Partner pursuant to Section III.2.
“Malpractice Claim” means any claim, action, or proceeding alleging professional negligence, malpractice, or violation of professional standards arising out of the Practice’s clinical services.
“Net Profits” and “Net Losses” mean the income or losses of the Practice as determined under Section III.4(A).
“Non-Physician Revenue” means any revenue derived from ancillary services not requiring a professional medical license.
“Partner Percentage Interest” or “Percentage Interest” means the percentage set forth for each Partner on Schedule A, as adjusted in accordance with this Agreement.
“Practice Assets” means all property, tangible or intangible, owned or leased by the Practice.
“Restricted Activities” has the meaning assigned in Section V.2.
Other capitalized terms are defined in the body of this Agreement or its exhibits.

III. OPERATIVE PROVISIONS

1. Formation; Purpose; Term

A. Formation. The Partners hereby form a partnership pursuant to the Act under the name [PRACTICE NAME] (the “Practice”).
B. Purpose. The sole purpose of the Practice is the provision of medical and related health-care services permissible under Applicable Law. Any activity outside this scope requires unanimous Partner approval.
C. Principal Office. The principal business office shall be located at [ADDRESS], or at such other location(s) as the Partners may determine.
D. Term. The term of the Practice commences on the Effective Date and continues until dissolved in accordance with Section VI or VIII.

2. Capital Contributions; Capital Accounts

A. Initial Contributions. On the Effective Date each Partner shall contribute the amount set forth opposite such Partner’s name on Schedule A.
B. Additional Contributions. Additional Capital Contributions shall require a [MAJORITY / SUPERMAJORITY / UNANIMOUS] vote of the Partners.
C. Capital Accounts. A Capital Account shall be maintained for each Partner in accordance with Internal Revenue Code § 704 and Treasury Regulations thereunder.
[// GUIDANCE: Insert tax counsel adjustments for professional service partnerships as needed.]

3. Management & Voting

A. Management Committee. The Practice shall be managed by a Management Committee consisting of [NUMBER] Partners (the “Management Committee”).
B. Voting. Except where this Agreement requires a greater vote, actions require the affirmative vote of Partners holding more than [50 %] of the aggregate Percentage Interests.
C. Medical Decision-Making. Notwithstanding anything herein, all decisions requiring the exercise of independent medical judgment shall remain exclusively with physicians properly licensed in Arizona, and no provision of this Agreement shall be construed to permit the corporate practice of medicine by non-physicians.

4. Distributions; Compensation; Allocation of Profits and Losses

A. Net Profits and Net Losses shall be allocated among the Partners pro rata in accordance with their Percentage Interests, unless Schedule B provides for an alternative allocation formula based on productivity (e.g., relative value units).
B. Cash Distributions. Subject to reasonable reserves for working capital, debt service, and regulatory contingencies, distributions shall be made at least [QUARTERLY].
C. Partner Compensation. Partner draw methodologies are described on Schedule B. Any productivity adjustments must comply with fee-splitting and Stark restrictions.

5. Practice Operations & Compliance

A. Licensing. Each Partner shall maintain at all times an unrestricted Arizona medical license and all DEA registrations required to perform clinical duties.
B. Fee-Splitting; Anti-Kickback. No Partner shall accept, pay, or agree to pay any remuneration in violation of Applicable Law, including the prohibition on splitting fees with unlicensed persons.
C. Medical Records. The Practice shall maintain records in compliance with HIPAA, Arizona Health Care Records Act, and CMS regulations.
D. Policies & Procedures. The Management Committee shall adopt written compliance policies addressing billing, coding, Stark/Anti-Kickback compliance, and OSHA standards.

IV. REPRESENTATIONS & WARRANTIES

Each Partner represents and warrants to the others that, as of the Effective Date and at all times thereafter:

1. Licensing & Good Standing. Such Partner is duly licensed to practice medicine in Arizona and is not subject to any suspension, revocation, or disciplinary action that would materially impair his or her ability to practice.
2. No Debarment. Such Partner is not excluded from participation in Medicare, Medicaid, or any federal health-care program.
3. Authority. Such Partner has full authority to enter this Agreement and to perform his or her obligations.
4. No Conflicts. The execution, delivery, and performance of this Agreement by such Partner do not violate any other agreement, judgment, or order binding upon the Partner.
5. Survival. The representations and warranties in this Article IV survive the execution hereof for a period of [TWO (2)] years following a Partner’s withdrawal or termination.

V. COVENANTS & RESTRICTIONS

1. Affirmative Covenants

Each Partner covenants to:
A. Comply with Applicable Law and Practice policies;
B. Maintain malpractice insurance in the minimum coverage amounts set forth in Section VII.3;
C. Promptly notify the Practice of any threatened or actual Malpractice Claim or regulatory investigation.

2. Negative Covenants; Restricted Activities

A. No Partner shall engage in any activity that would: (i) violate corporate practice restrictions; (ii) constitute illegal fee-splitting; or (iii) jeopardize the Practice’s licensure, provider numbers, or payor contracts.
B. Non-Competition [OPTIONAL]. During the term of the Practice and for [12] months thereafter, a withdrawing Partner shall not establish or practice medicine within [X] miles of the principal office, except as otherwise permitted on Schedule C.
[// GUIDANCE: Arizona generally enforces reasonable physician non-competes only in limited circumstances; review A.R.S. § 44-1401 et seq. and current case law before inclusion.]

3. Notice Obligations

Each Partner shall provide written notice to the Management Committee within five (5) business days of: (a) receipt of any malpractice allegation; (b) any disciplinary proceeding; or (c) any condition that could reasonably be expected to impair such Partner’s ability to practice.

VI. DEFAULT & REMEDIES

1. Events of Default

A. Material breach of any provision of this Agreement not cured within thirty (30) days after written notice.
B. License Suspension. Suspension, probation, or revocation of a Partner’s medical license.
C. Exclusion from Federal Health-Care Programs.
D. Felony Conviction or crime of moral turpitude affecting professional standing.

2. Remedies

A. Mandatory Buy-Out. Upon an Event of Default, the non-defaulting Partners may elect to purchase the defaulting Partner’s interest at Fair Market Value less damages directly attributable to the default.
B. Suspension of Distributions. Distributions to the defaulting Partner shall be suspended during the cure period.
C. Injunctive Relief. Each Partner acknowledges that violation of Sections V.2 or VIII may cause irreparable harm entitling the non-breaching Partners to injunctive relief, in addition to any other remedies.
D. Attorneys’ Fees. The prevailing party in any action to enforce this Agreement is entitled to reasonable attorneys’ fees and costs.

VII. RISK ALLOCATION

1. Indemnification (Malpractice Indemnity)

Each Partner (the “Indemnifying Partner”) shall indemnify, defend, and hold harmless the Practice and the other Partners (each an “Indemnified Party”) from and against any Malpractice Claim arising out of the Indemnifying Partner’s professional negligence or willful misconduct, except to the extent covered by insurance.

2. Limitation of Liability (Malpractice Limits)

No Partner shall be liable to the Practice or any other Partner for monetary damages exceeding the limits of the malpractice insurance required under Section VII.3, except for acts of gross negligence, fraud, or intentional misconduct.

3. Insurance

A. Professional Liability. The Practice shall maintain professional liability (“malpractice”) insurance with limits of not less than [ \$1,000,000 per claim / \$3,000,000 aggregate ] or such higher limits as required by any payor contract.
B. Tail Coverage. A withdrawing Partner shall obtain, at his or her expense, extended reporting (“tail”) coverage for a period of at least five (5) years unless the Practice obtains occurrence-based coverage.
C. Business Insurance. The Practice shall maintain general liability, property, cyber-liability, and workers’ compensation insurance as commercially reasonable.

4. Force Majeure

No Partner shall be liable for failure to perform any obligation when such failure is caused by events beyond the Partner’s reasonable control, including acts of God, war, epidemic, or government action, provided that the affected Partner gives prompt notice and uses commercially reasonable efforts to resume performance.

VIII. DISPUTE RESOLUTION

1. Governing Law

This Agreement and all disputes arising hereunder shall be governed by and construed in accordance with the laws of the State of Arizona, without regard to its conflict-of-laws rules.

2. Forum Selection

Subject to the arbitration provisions below, each Partner irrevocably submits to the exclusive jurisdiction of the state courts located in [COUNTY], Arizona for any suit, action, or proceeding arising out of or relating to this Agreement.

3. Arbitration

A. Scope. Except for (i) applications for temporary, preliminary, or permanent injunctive relief and (ii) disputes relating to a Partner’s non-competition obligations (if any), any controversy or claim arising out of or relating to this Agreement shall be finally resolved by binding arbitration.
B. Rules & Administrator. The arbitration shall be administered by [AAA / JAMS] pursuant to its Health-Care Arbitration Rules.
C. Seat & Language. The seat of arbitration shall be [CITY], Arizona, and the proceedings shall be conducted in English.
D. Award. Judgment on the award may be entered in any court of competent jurisdiction.
E. Confidentiality. The arbitration and any award shall remain confidential except as required by law or to enforce the award.

4. Jury Trial Waiver [OPTIONAL]

To the fullest extent permitted by law, each Partner knowingly and voluntarily waives any right to a trial by jury in any action relating to this Agreement.

5. Injunctive Relief

Notwithstanding the arbitration provisions, any Partner may seek temporary, preliminary, or permanent injunctive relief in a state court of competent jurisdiction in Arizona to prevent or remedy a breach of Sections V or VII.

IX. GENERAL PROVISIONS

1. Amendments; Waivers. This Agreement may be amended only by a written instrument signed by Partners holding at least [SUPERMAJORITY %] of the Percentage Interests, unless a greater threshold is expressly required herein.
2. Assignment. No Partner may assign or encumber his or her Partnership Interest except as expressly permitted in this Agreement. Any unauthorized assignment is void.
3. Successors & Assigns. This Agreement is binding upon and inures to the benefit of the Partners and their respective heirs, legal representatives, and permitted assigns.
4. Severability. If any provision is held unenforceable, the remaining provisions shall remain in full force, and the invalid provision shall be modified to the minimum extent necessary to render it enforceable while preserving the Parties’ original intent.
5. Integration. This Agreement, together with all schedules and exhibits, constitutes the entire agreement among the Partners and supersedes all prior or contemporaneous oral or written agreements.
6. Counterparts; Electronic Signatures. This Agreement may be executed in any number of counterparts, each of which is deemed an original. Electronic signatures and facsimile transmissions are deemed originals for all purposes.
7. Notices. All notices must be in writing and delivered (i) by personal delivery, (ii) certified U.S. Mail (return receipt requested), (iii) nationally recognized overnight courier, or (iv) electronic mail with confirmation of receipt, addressed to the recipient at the address set forth on Schedule A or such other address as a Partner may designate by notice.
8. Headings. Headings are for convenience only and do not affect interpretation.
9. Construction. The Parties acknowledge that each has reviewed this Agreement and that no rule of strict construction shall be applied against any Party.

X. EXECUTION BLOCK

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

[Notary Acknowledgment, if required]
[Witness lines, if desired]

SCHEDULE A

Partner Percentage Interests & Capital Contributions

SCHEDULE B

Compensation & Distribution Methodology
[// GUIDANCE: Insert wRVU, collections, or equal share formulas. Ensure compliance with fee-splitting prohibitions.]

SCHEDULE C

Non-Competition & Non-Solicitation Terms (if applicable)
[// GUIDANCE: Confirm enforceability under Arizona law before adoption.]