Delaware Medical Practice Partnership Agreement

Delaware Medical Practice Partnership Agreement

I. Parties and Recitals

This Medical Practice Partnership Agreement ("Agreement") is entered into as of [__/__/____] by and among:

(individually a "Partner" and collectively the "Partners").

Recitals. Each Partner is duly licensed to practice medicine in the State of Delaware under 24 Del. C. ch. 17. The Partners desire to associate for the practice of medicine and to set forth their rights and obligations.

II. Formation and Entity Structure

2.1 Entity Form (select one):
☐ General partnership under 6 Del. C. ch. 15.
☐ Limited liability partnership (LLP) under 6 Del. C. § 15-1001.
☐ Professional service corporation under 8 Del. C. ch. 6 (this Agreement governs as a shareholders' / governance agreement).
☐ Limited liability company under 6 Del. C. ch. 18 (this Agreement governs as the operating agreement).

2.2 Name. The practice shall operate as "[___________________________ ]" (the "Practice"), in compliance with Board of Medical Licensure naming conventions.

2.3 Principal Office. [__________________________________________], Delaware.

2.4 Purpose. The exclusive purpose is the practice of medicine and ancillary services lawfully provided by Delaware-licensed physicians.

2.5 Term. The Practice commences on [__/__/____] and continues until dissolved per Article XII.

III. Capital Contributions

3.1 Initial Capital. Each Partner contributes the following:

3.2 Additional Capital. Additional capital calls require [☐ majority ☐ supermajority ☐ unanimous] consent.

3.3 Capital Accounts. Maintained per § 704(b) of the Internal Revenue Code and Treasury Regulations.

3.4 No Interest on Capital. No Partner shall receive interest on capital contributions except as expressly provided.

IV. Profit, Loss, and Compensation

4.1 Allocation Method (select):
☐ Pro rata to ownership percentages.
☐ Production-based formula: collections attributable to each Partner less allocated overhead.
☐ Hybrid (specify): [____________________________________].

4.2 Compensation Components.

• Base draw: $[__________] per [☐ month ☐ pay period].
• Production bonus: [____]% of personally generated collections above $[__________].
• Call coverage stipend: $[__________] per night/weekend.

4.3 Fee-Splitting Compliance (24 Del. C. § 1731(b)(11)). No portion of any Partner's compensation shall be paid as a referral fee or otherwise constitute fee-splitting prohibited by Delaware Board of Medical Licensure rules. Compensation tied to referrals to or from non-Partners is prohibited.

4.4 Distributions. Net cash distributed [☐ monthly ☐ quarterly] subject to working-capital reserves of $[__________].

V. Management and Voting

5.1 Managing Partner. [____________________________________] shall serve as Managing Partner.

5.2 Routine Decisions. The Managing Partner may bind the Practice in matters under $[__________] in the ordinary course.

5.3 Major Decisions (require [☐ majority ☐ supermajority ☐ unanimous] vote):

☐ Admission of a new Partner
☐ Expulsion of a Partner
☐ Borrowing exceeding $[__________]
☐ Lease, purchase, or sale of real property
☐ Sale of substantially all assets
☐ Merger or consolidation
☐ Amendment of this Agreement
☐ Hiring or termination of senior employees
☐ Adoption of annual budget

5.4 Meetings. Held [☐ monthly ☐ quarterly]; written notice not less than [____] days; quorum [____]; minutes maintained.

VI. Clinical Standards and Compliance

6.1 Each Partner shall maintain an active, unrestricted Delaware medical license, DEA registration, and medical-staff privileges as appropriate.

6.2 The Practice shall comply with HIPAA, Delaware patient-records statutes, the Delaware Medical Practice Act, and Board of Medical Licensure regulations (24 DE Admin. Code 1700).

6.3 Each Partner shall maintain professional liability insurance with minimum limits of $[__________] per claim / $[__________] aggregate.

6.4 No Partner shall engage in self-referral or financial-interest arrangements prohibited by federal Stark Law (42 U.S.C. § 1395nn), the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), or 24 Del. C. § 1731.

VII. Books, Records, and Audit

7.1 The Practice shall maintain accurate books on an [☐ accrual ☐ cash] basis.

7.2 Annual financial statements shall be prepared by [____________________________________] and circulated within [____] days of fiscal year-end.

7.3 Any Partner may inspect books on reasonable notice.

VIII. Withdrawal, Retirement, and Death

8.1 Voluntary Withdrawal. A Partner may withdraw upon [____] days' written notice.

8.2 Mandatory Retirement. ☐ Yes, at age [____] ☐ No.

8.3 Death or Disability. A Partner who dies or becomes permanently disabled (90 consecutive days or 180 days in any 12-month period) shall be deemed withdrawn.

8.4 Buyout Price. Equal to the withdrawing Partner's capital account plus [____]% of accounts receivable attributable to the Partner, less liabilities. Goodwill ☐ included ☐ excluded.

8.5 Payment Terms. [____]% on departure; balance over [____] months at [____]% interest; secured by [____________________________________].

IX. Expulsion

9.1 A Partner may be expelled by [☐ supermajority ☐ unanimous vote of the remaining Partners] for:

☐ License suspension, revocation, or restriction
☐ Conviction of a felony or crime of moral turpitude
☐ Exclusion from Medicare, Medicaid, or other federal/state healthcare programs
☐ Loss or non-renewal of medical-staff privileges affecting the Practice
☐ Material, uncured breach of this Agreement
☐ Fraud, embezzlement, or material dishonesty

9.2 Expelled Partner receives buyout per § 8.4, subject to setoff for damages.

X. Restrictive Covenants — Delaware Limitations

10.1 No Practice Restriction. Consistent with 6 Del. C. § 2707, this Agreement shall not be construed to restrict any Partner's right to practice medicine in any locale or for any period upon termination.

10.2 Liquidated Damages (Optional). Upon withdrawal or expulsion, a withdrawing Partner who, within [____] months, treats patients of the Practice or operates within [____] miles of a Practice office shall pay liquidated damages of $[__________], representing the parties' reasonable estimate of harm. The parties agree this amount is reasonably related to anticipated injury and is not a penalty.

10.3 Non-Solicitation of Employees. For [____] months following departure, the former Partner shall not solicit Practice employees for employment elsewhere.

10.4 Confidentiality. Each Partner shall maintain in confidence all Practice business records, financial data, fee schedules, payor contracts, and proprietary processes, subject to legally compelled disclosure.

10.5 Patient Records and Continuity of Care. Patient records remain Practice property; departing Partners shall comply with Board of Medical Licensure rules on patient notification and continuity, including 24 DE Admin. Code 1700 § 16.0 (continuity-of-care requirements).

XI. Indemnification and Insurance

11.1 The Practice shall indemnify each Partner for liabilities incurred in good faith on behalf of the Practice, to the maximum extent permitted by 8 Del. C. § 145 (if PSC) or 6 Del. C. § 18-108 (if LLC).

11.2 The Practice shall maintain:
☐ General liability ☐ Professional liability (entity coverage) ☐ Property
☐ Cyber/HIPAA ☐ Employment practices ☐ Business interruption
☐ Workers' compensation as required by 19 Del. C. ch. 23

11.3 Tail Coverage. A withdrawing Partner shall purchase tail coverage at the Partner's expense unless the Practice maintains occurrence-form coverage.

XII. Dissolution and Winding Up

12.1 The Practice shall dissolve upon:

☐ Unanimous written consent of the Partners
☐ Sale of substantially all assets
☐ Withdrawal/death reducing Partners below [____]
☐ Entry of a judicial decree of dissolution
☐ Final loss of all Partners' Delaware medical licenses

12.2 Winding Up. Assets applied: (a) creditors; (b) tax obligations; (c) Partner loans; (d) capital accounts; (e) remaining balance per § IV.

12.3 Patient Continuity. Upon dissolution, the Partners shall jointly arrange for orderly transfer of patient records and notice consistent with Board of Medical Licensure rules.

XIII. Dispute Resolution

13.1 Negotiation. The Partners shall first negotiate in good faith for [____] days.

13.2 Mediation. Disputes unresolved after negotiation shall be submitted to mediation in [__________] County, Delaware.

13.3 Arbitration / Litigation (select):
☐ Binding arbitration under AAA Commercial Rules in [__________] County, Delaware.
☐ Litigation in the Delaware Court of Chancery / Superior Court.

13.4 Governing Law. This Agreement is governed by Delaware law.

XIV. General Provisions

14.1 Notices. In writing to the addresses in Article I.
14.2 Amendments. Only by written instrument signed by [☐ majority ☐ supermajority ☐ all] Partners.
14.3 Severability. Invalid provisions severed without affecting the remainder.
14.4 Integration. This Agreement is the entire agreement of the Partners.
14.5 Counterparts; E-Signatures. Permitted under 6 Del. C. ch. 12A (Uniform Electronic Transactions Act).

XV. Signatures

Sources and References

• 8 Del. C. ch. 6 — Professional Service Corporation Act
• 6 Del. C. ch. 18 — Delaware Limited Liability Company Act
• 6 Del. C. ch. 15 — Delaware Revised Uniform Partnership Act
• 6 Del. C. § 2707 — Physician restrictive-covenant statute (voiding practice restrictions; preserving damages clauses)
• 24 Del. C. ch. 17 — Delaware Medical Practice Act
• 24 Del. C. § 1731 — Unprofessional conduct (fee-splitting / referral-fee prohibitions)
• 24 DE Admin. Code 1700 — Board of Medical Licensure and Discipline regulations
• 42 U.S.C. § 1395nn (Stark Law); 42 U.S.C. § 1320a-7b(b) (Anti-Kickback Statute)