MEDICAL PRACTICE PARTNERSHIP AGREEMENT

(California – Court-Ready Template)

[// GUIDANCE: Replace all bracketed items in ALL-CAPS before execution. Delete all guidance comments and brackets in final version.]

TABLE OF CONTENTS

1. Document Header
2. Definitions
3. Operative Provisions
    3.1 Formation, Name, Purpose & Term
    3.2 Capital Contributions
    3.3 Allocation of Profits & Losses; Distributions
    3.4 Management & Voting
    3.5 Practice Licensing & Regulatory Compliance
    3.6 Compensation Methodology; Fee-Splitting Safeguards
    3.7 Books, Records & Accounting
    3.8 Banking & Spending Authority
    3.9 Partner Duties; Time Commitment; Outside Activities
    3.10 Admission, Withdrawal & Buy-Sell
4. Representations & Warranties
5. Covenants & Restrictions
6. Default & Remedies
7. Risk Allocation
    7.1 Malpractice Indemnification
    7.2 Limitation of Liability
    7.3 Insurance Requirements
    7.4 Force Majeure
8. Dispute Resolution
9. General Provisions
10. Execution Block

1. DOCUMENT HEADER

MEDICAL PRACTICE PARTNERSHIP AGREEMENT (this “Agreement”) is made and entered into as of [EFFECTIVE DATE] (the “Effective Date”) by and among [FULL LEGAL NAME OF PARTNER A], [FULL LEGAL NAME OF PARTNER B], and any other Persons admitted as Partners pursuant hereto (each, a “Partner” and collectively, the “Partners”).

RECITALS

A. The Partners are each duly licensed physicians authorized to practice medicine in the State of California and desire to associate as a partnership for the purposes set forth herein.
B. The Partners wish to enter into this Agreement to govern their relationship and the management and operation of the medical practice described below.
C. The Partners intend that this Agreement comply with all applicable California and federal laws, including without limitation the California Business and Professions Code, the Moscone-Knox Professional Corporation Act, and all regulations of the Medical Board of California.

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

2. DEFINITIONS

Unless the context requires otherwise, the following terms have the meanings set forth below. Terms defined in this Section are capitalized throughout the Agreement.

“Affiliate” means, with respect to a Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person.

“Agreement” has the meaning set forth in the preamble.

“Applicable Law” means (a) the California Business and Professions Code, including without limitation §§ 2052, 650, and 2400; (b) the California Corporations Code; (c) the California Code of Regulations; (d) all other federal, state, and local statutes, regulations, rules, ordinances, and orders applicable to the Practice and the Partners.

“Capital Account” means, with respect to each Partner, such Partner’s capital account maintained in accordance with Section 3.2.

“Claim” means any demand, action, suit, proceeding, or investigation, whether civil, criminal, administrative, or otherwise.

“Gross Revenues” means all revenues, receipts, and other monies collected by the Partnership arising out of the Practice, exclusive of returns or refunds.

“Malpractice Claim” means any Claim alleging professional negligence, medical malpractice, or violation of professional standards in the rendering (or alleged failure to render) medical services.

“Partner” and “Partnership” have the meanings set forth in the preamble.

“Person” means any individual, corporation, partnership, limited liability company, trust, or other entity.

“Practice” means the medical practice operated by the Partnership under this Agreement.

[// GUIDANCE: Add additional defined terms as needed for customization.]

3. OPERATIVE PROVISIONS

3.1 Formation, Name, Purpose & Term

3.1.1 Formation. The Partners hereby form a professional partnership (the “Partnership”) pursuant to the California Uniform Partnership Act of 1994 (Cal. Corp. Code § 16100 et seq.) and Applicable Law.
3.1.2 Name. The Partnership shall conduct business under the name [PRACTICE NAME], or such other name approved by the Partners and duly registered with the Medical Board of California and appropriate governmental authorities.
3.1.3 Purpose. The exclusive purpose of the Partnership is the practice of medicine and all ancillary activities permissible for physicians under Applicable Law. The Partnership shall not engage in any activity prohibited under California’s corporate practice of medicine doctrine.
3.1.4 Term. The Partnership shall commence on the Effective Date and shall continue until dissolved pursuant to this Agreement or Applicable Law.

3.2 Capital Contributions

(a) Initial Contributions. On the Effective Date, each Partner shall contribute the property or cash specified on Schedule 1 (collectively, the “Capital Contributions”).
(b) Additional Contributions. No Partner shall be required to make additional Capital Contributions unless approved by [SUPER-MAJORITY THRESHOLD] of the Partners.

3.3 Allocation of Profits & Losses; Distributions

(a) Allocation. Profits and losses shall be allocated among the Partners pro rata in proportion to their Percentage Interests as set forth on Schedule 1, except as otherwise required by the Internal Revenue Code.
(b) Distributions. Subject to reserve requirements established by the Managing Partner(s), the Partnership shall distribute available cash at least [QUARTERLY/MONTHLY].

3.4 Management & Voting

3.4.1 Managing Partner(s). [NAME OR SELECTION MECHANISM] shall serve as the initial Managing Partner(s) (the “Managing Partner”).
3.4.2 Authority. The Managing Partner shall oversee day-to-day operations, subject to limitations in Schedule 2 (Reserved Matters) requiring Partner approval.
3.4.3 Voting. Except where otherwise specified, actions require approval of Partners holding [SIMPLE MAJORITY/SUPER-MAJORITY] of Percentage Interests.

3.5 Practice Licensing & Regulatory Compliance

(a) Licensure. Each Partner shall at all times maintain an unrestricted license to practice medicine in California.
(b) Entity Compliance. The Partnership shall register as a “fictitious name permit” or professional corporation as required, and shall timely file all reports with the Medical Board of California.
(c) Corporate Practice Restrictions. No Person other than a licensed physician (or other statutorily permitted professional) shall own any share, profit interest, or governance right in the Partnership. See Cal. Bus. & Prof. Code § 2400.
(d) Continuing Education & Standards. Each Partner shall satisfy all continuing medical education requirements and comply with the Medical Practice Act and all standards of the Medical Board of California.

3.6 Compensation Methodology; Fee-Splitting Safeguards

(a) Compensation Policy. Partner compensation shall be determined pursuant to Schedule 3 (Compensation Formula) and shall be based on bona fide services rendered.
(b) Fee-Splitting Prohibition. All compensation arrangements shall strictly comply with Cal. Bus. & Prof. Code § 650; no remuneration shall be paid for patient referrals or otherwise constitute prohibited fee splitting.
(c) Billing Practices. The Partnership shall bill patients and third-party payors in its own name and shall comply with all federal and state fraud and abuse laws, including Medicare/Medicaid regulations and the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)).

3.7 Books, Records & Accounting

(a) Fiscal Year. The fiscal year of the Partnership shall end on [DATE].
(b) GAAP. Books and records shall be maintained in accordance with generally accepted accounting principles.
(c) Access Rights. Each Partner may, upon reasonable notice, inspect and copy the Partnership’s books and records during normal business hours.

3.8 Banking & Spending Authority

All funds shall be deposited in accounts in the Partnership’s name. Two authorized signatories (at least one Managing Partner) shall be required for disbursements above [$ THRESHOLD].

3.9 Partner Duties; Time Commitment; Outside Activities

(a) Duty of Loyalty & Care. Each Partner owes fiduciary duties of loyalty, care, and good faith to the Partnership.
(b) Minimum Clinical Hours. Each Partner shall devote not less than [HOURS/WEEK] to the Practice.
(c) Outside Activities. A Partner may engage in outside professional activities only if such activities do not conflict with the Partnership’s interests or violate any non-competition covenant in Section 5.3.

3.10 Admission, Withdrawal & Buy-Sell

Procedures for admission of new Partners, voluntary withdrawal, expulsion, disability, death, and mandatory buy-sell pricing are set forth in Schedule 4 (Buy-Sell Provisions).

4. REPRESENTATIONS & WARRANTIES

4.1 By Each Partner. Each Partner represents and warrants to the other Partners and the Partnership that, as of the Effective Date and continuing during the term of this Agreement:
(a) Licensure. The Partner holds an active and unrestricted license to practice medicine in California.
(b) No Restrictions. The Partner is not subject to any suspension, probation, or limitation by the Medical Board of California or any other governmental body.
(c) Authority. The Partner has full power and authority to enter into this Agreement.
(d) No Conflicts. Execution of this Agreement does not violate any other agreement or court order binding upon the Partner.

4.2 Survival. The representations and warranties in this Section shall survive until [X] years after a Partner ceases to be a Partner.

5. COVENANTS & RESTRICTIONS

5.1 Compliance with Laws. Each Partner shall comply with all Applicable Laws, ethical standards, and payer requirements.

5.2 Confidentiality. Partners shall maintain patient confidentiality and protect all proprietary information.

5.3 Non-Competition & Non-Solicitation.
(a) During the term and for [TWO (2)] years thereafter, no Partner shall establish or join a competing medical practice within a [10-MILE] radius of any office of the Partnership, except as prohibited by Cal. Bus. & Prof. Code § 16600.
(b) During the same period, no Partner shall solicit any patients or employees of the Partnership for competing services.
[// GUIDANCE: Narrow geographic and temporal scope to maximize enforceability under California’s strong public-policy limitations on non-competition.]

5.4 Notice & Cure of Regulatory Issues. A Partner who receives notice of any investigation, claim, or disciplinary action shall notify the Managing Partner within [5] business days and cooperate in curing any violation.

6. DEFAULT & REMEDIES

6.1 Events of Default. The following constitute an “Event of Default”:
(a) Material breach of this Agreement not cured within [30] days after written notice;
(b) Loss, suspension, or restriction of medical license;
(c) Conviction of a felony or crime of moral turpitude;
(d) Gross negligence or willful misconduct resulting in material harm to the Partnership.

6.2 Remedies. Upon an Event of Default, the non-defaulting Partners may:
(a) Suspend the defaulting Partner’s voting and distribution rights;
(b) Require the defaulting Partner to sell his or her Partnership Interest pursuant to Schedule 4;
(c) Seek injunctive relief or specific performance;
(d) Recover damages, costs, and reasonable attorneys’ fees.

7. RISK ALLOCATION

7.1 Malpractice Indemnification

Each Partner (the “Indemnifying Partner”) shall indemnify, defend, and hold harmless the Partnership and the other Partners (the “Indemnified Parties”) from and against any Malpractice Claim arising out of the Indemnifying Partner’s professional acts or omissions, except to the extent covered by the Partnership’s professional liability insurance.

7.2 Limitation of Liability

Notwithstanding anything herein to the contrary, the aggregate liability of any Partner to the Partnership and the other Partners for Malpractice Claims shall not exceed the lesser of:
(a) the limits of the professional liability insurance maintained by such Partner under Section 7.3; or
(b) [$ AMOUNT].

7.3 Insurance Requirements

(a) Minimum Coverage. The Partnership shall at all times maintain professional liability (“malpractice”) insurance with limits of not less than [$1,000,000 per claim / $3,000,000 aggregate].
(b) Tail Coverage. Departing Partners shall obtain tail coverage for not less than [X] years post-departure.

7.4 Force Majeure

No Partner shall be liable for failure to perform any obligation (other than payment obligations) due to events beyond reasonable control, including acts of God, pandemics, government orders, or labor disputes. The affected Partner shall give prompt notice and use commercially reasonable efforts to resume performance.

8. DISPUTE RESOLUTION

8.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California (“state_medical_law”), without regard to conflicts-of-law principles.

8.2 Forum Selection. Any court action permitted under this Section shall be brought exclusively in the state courts located in [COUNTY], California (“state_court”).

8.3 Arbitration. Except for (a) actions for injunctive relief under Sections 5 or 6, and (b) collection of undisputed monetary obligations, all disputes arising out of or relating to this Agreement shall be resolved by binding arbitration administered by [ARBITRATION PROVIDER] in accordance with its healthcare rules and the California Arbitration Act (Cal. Code Civ. Proc. § 1280 et seq.).
(a) Location. [CITY], California.
(b) Arbitrator Qualification. A retired judge or attorney with at least ten (10) years’ experience in healthcare law.
(c) Discovery. Limited to that necessary for a fair resolution, as determined by the arbitrator.
(d) Award. The arbitrator’s award shall be final and judgment may be entered in any court of competent jurisdiction.

8.4 Jury Waiver. To the extent not prohibited by Applicable Law, each Party irrevocably waives the right to trial by jury in any action relating to this Agreement.

8.5 Injunctive Relief. Each Party acknowledges that breach of Sections 2 (Definitions—Confidential Information), 5.2 (Confidentiality), or 5.3 (Non-Competition/Non-Solicitation) would cause irreparable harm and agrees that injunctive relief may be granted without the posting of a bond.

9. GENERAL PROVISIONS

9.1 Amendments; Waivers. This Agreement may be amended only by a written instrument signed by Partners holding at least [SUPER-MAJORITY THRESHOLD]. No waiver shall be valid unless in writing.

9.2 Assignment. No Partner may assign or encumber its Partnership Interest except as expressly permitted herein.

9.3 Successors & Assigns. This Agreement binds and benefits the Parties and their permitted successors and assigns.

9.4 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 effectuate the Parties’ intent.

9.5 Integration. This Agreement, including all Schedules, constitutes the entire understanding of the Parties and supersedes all prior agreements.

9.6 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which is deemed an original, and delivery of signatures by electronic means (e.g., DocuSign, PDF) shall be deemed effective.

9.7 Notices. All notices shall be in writing and delivered by (a) personal service, (b) certified mail (return receipt requested), (c) nationally recognized overnight courier, or (d) electronic mail with confirmation of receipt, to the addresses set forth on Schedule 5 (Notice Information). Notice is effective on receipt.

10. EXECUTION BLOCK

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

[// GUIDANCE: Add notarization or witness blocks if required by lender, hospital bylaws, or other stakeholders. California law does not generally require notarization for partnership agreements, but consider authentication for evidentiary purposes.]

SCHEDULE 1

Capital Contributions, Percentage Interests, and Initial Capital Accounts

SCHEDULE 2

Reserved Matters Requiring Partner Approval

[Insert list, e.g., sale of substantial assets, incurrence of debt > $X, relocation of main office, amendment of compensation formula, etc.]

SCHEDULE 3

Compensation Formula

[Insert RVU-based, collections-based, salary plus bonus, or hybrid methodology. Provide definitions of productivity metrics and timelines.]

SCHEDULE 4

Buy-Sell Provisions

[Include valuation method (e.g., discounted cash flow, appraisal, multiple of collections), payment terms (down payment, promissory note amortization), triggering events, and required security.]

SCHEDULE 5

Notice Information

[// GUIDANCE:
1. Review California fee-splitting and self-referral rules (Cal. Bus. & Prof. Code § 650, § 650.01, and federal Stark Law) when finalizing compensation.
2. Confirm that non-competition covenants comply with Cal. Bus. & Prof. Code § 16600; consider focusing restrictions on non-solicitation and protection of trade secrets rather than broad geographic bans.
3. Verify malpractice insurance limits align with hospital privileging requirements and any ACO/IPA participation agreements.
4. Tailor arbitration provider rules (e.g., JAMS, AAA) and discovery parameters to the Partners’ risk tolerance.
5. Attach any required compliance policies (HIPAA, OSHA, infection control) by reference for operational use.]

© [YEAR] – Template prepared for professional legal review.