MEDICAL PRACTICE PARTNERSHIP AGREEMENT
(Illinois – Physician-to-Physician)
TABLE OF CONTENTS
- Document Header
- Definitions
- Operative Provisions
- Representations & Warranties
- Covenants & Restrictions
- Default & Remedies
- Risk Allocation
- Dispute Resolution
- General Provisions
- Execution Block
1. DOCUMENT HEADER
1.1 Parties. This Medical Practice Partnership Agreement (this “Agreement”) is entered into as of [EFFECTIVE DATE] (the “Effective Date”) by and among Dr. [NAME], M.D., and Dr. [NAME], M.D. (each, a “Partner,” and collectively, the “Partners”).
1.2 Recitals.
A. The Partners are each duly licensed physicians in good standing under the Illinois Medical Practice Act of 1987, 225 ILCS 60/1 et seq. (the “IMPA”).
B. The Partners desire to associate together as a partnership for the practice of medicine in the State of Illinois, subject to all applicable laws, regulations, and professional standards, including without limitation (i) the “corporate practice of medicine” doctrine, (ii) the fee-splitting prohibitions contained in 225 ILCS 60/22(A)(14), and (iii) any rules promulgated by the Illinois Department of Financial and Professional Regulation (“IDFPR”).
C. The Partners therefore agree as follows.
1.3 Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Illinois related to the practice of medicine (“state_medical_law”).
2. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings set forth below. Defined terms may be used in the singular or plural and shall apply to any tense, gender, or number as the context requires.
“Accountant” means the independent certified public accountant engaged pursuant to Section 3.12.
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with such Person.
“Agreement” has the meaning set forth in the Document Header.
“Arbitration Rules” has the meaning set forth in Section 8.3.
“Capital Account” means the bookkeeping account maintained for each Partner in accordance with Section 3.6.
“Capital Contribution” has the meaning set forth in Section 3.6.
“Clinic” means each facility from which the Partnership provides medical services.
“Confidential Information” has the meaning set forth in Section 5.5.
“Defaulting Partner” has the meaning set forth in Section 6.1.
“Fiscal Year” means the twelve-month period selected pursuant to Section 3.12.
“Governing Law” has the meaning set forth in Section 1.3.
“IDFPR” has the meaning set forth in the Recitals.
“Indemnified Claim” has the meaning set forth in Section 7.1.
“Malpractice Insurance” means the professional liability insurance satisfying Section 7.3.
“Non-Defaulting Partners” has the meaning set forth in Section 6.2.
“Partner” or “Partners” has the meaning set forth in Section 1.1.
“Partnership” means the partnership formed pursuant to Section 3.1.
“Partnership Interest” means all of a Partner’s rights in the Partnership, including voting, economic, and management rights.
“Profit” and “Loss” have the meanings set forth in Section 3.7.
“Regulatory Event” means (a) suspension, limitation, or revocation of a Partner’s license; (b) exclusion from federal health-care programs; or (c) any other event rendering a Partner legally unable to practice medicine in Illinois.
[// GUIDANCE: Add additional defined terms here if your practice model requires them.]
3. OPERATIVE PROVISIONS
3.1 Formation; Professional Status.
(a) The Partners hereby form a general partnership (the “Partnership”) under Illinois law for the sole purpose of practicing medicine.
(b) If the Partners elect to operate as a professional corporation, professional limited liability company, or other professional entity, they shall execute and file all required organizational documents and maintain compliance with the Illinois Professional Service Corporation Act, 805 ILCS 10/1 et seq., or the Professional Limited Liability Company Act, 805 ILCS 185/1 et seq., as applicable.
3.2 Purpose. The Partnership’s exclusive purpose is to engage in the practice of medicine and any activities reasonably related or incidental thereto, consistent with the IMPA and IDFPR regulations. No Partner shall permit the Partnership to engage in any activity prohibited under the corporate practice of medicine doctrine or fee-splitting rules.
3.3 Name and Principal Office. The Partnership shall conduct business under the name [LEGAL NAME OF PRACTICE] (or such other name as may be approved by IDFPR) and shall maintain its principal office at [ADDRESS] or such other location in Illinois as the Partners may designate.
3.4 Term. The Partnership shall commence on the Effective Date and shall continue until dissolved pursuant to Section 6.4.
3.5 Licensing & Compliance.
(a) Each Partner represents that he or she holds an unrestricted Illinois medical license and will maintain such license in good standing.
(b) Each Partner shall timely complete continuing medical education (“CME”) and comply with all IDFPR rules.
(c) The Partnership shall not employ or contract with any unlicensed person to render professional medical judgment.
3.6 Capital Contributions.
(a) Initial Contributions. On the Effective Date, each Partner shall contribute to the Partnership the amount or value set forth on Schedule I (each, a “Capital Contribution”).
(b) Additional Contributions. Additional Capital Contributions shall require unanimous approval of the Partners, except as otherwise provided in Section 6.2(c).
[// GUIDANCE: Insert buy-in formulas if your firm requires incoming Partners to purchase equity.]
3.7 Profits, Losses, and Distributions.
(a) Allocation. Profits and Losses shall be allocated among the Partners in proportion to their respective Partnership Interests unless Schedule II provides otherwise.
(b) Distributions. Cash distributions shall be made at least quarterly, subject to retention of reasonable reserves and in compliance with fee-splitting prohibitions under 225 ILCS 60/22(A)(14).
3.8 Management; Voting.
(a) Ordinary Course Decisions require a majority vote in Interest.
(b) Major Decisions require unanimous consent and include:
(i) Admission of a new Partner;
(ii) Merger, consolidation, or sale of substantially all assets;
(iii) Incurrence of indebtedness exceeding [DOLLAR AMOUNT];
(iv) Amendment of this Agreement.
[// GUIDANCE: Customize the list of Major Decisions to match your governance expectations.]
3.9 Partner Compensation. Each Partner shall be entitled to receive:
(a) Base Compensation of [AMOUNT or FORMULA]; and
(b) Productivity Compensation calculated pursuant to Schedule III.
All compensation methodologies shall comply with Stark Law, Anti-Kickback Statute, and 225 ILCS 60/22(A)(14) fee-splitting restrictions.
3.10 Employment of Non-Physician Personnel. The Partnership may employ non-physician personnel (e.g., nurses, medical assistants) as necessary; provided, however, that no non-physician shall hold any ownership, voting, or profit-sharing interest in the Partnership.
3.11 Records; Accounting.
(a) Books of account shall be maintained in accordance with generally accepted accounting principles (GAAP).
(b) The Partners shall engage an Accountant mutually acceptable to maintain financial records, prepare tax returns, and furnish annual statements.
(c) Fiscal Year. The Fiscal Year of the Partnership shall be [CALENDAR YEAR / OTHER].
3.12 Banking. All Partnership funds shall be deposited in accounts titled in the Partnership’s name. All withdrawals shall require the signature of at least [ONE/TWO] Partner(s).
3.13 Expansion; New Partners. Admission of additional Partners shall require unanimous consent and execution of a joinder agreement binding such Partner to this Agreement.
3.14 Conditions Precedent to Practice. No Partner may deliver patient services until he or she (a) provides proof of Malpractice Insurance, (b) furnishes a valid DEA registration, and (c) completes credentialing with major payors.
4. REPRESENTATIONS & WARRANTIES
Each Partner represents and warrants to the other Partners and to the Partnership that, as of the Effective Date and on a continuing basis:
4.1 Authority. He or she has the full legal right, power, and authority to execute and perform this Agreement.
4.2 Licensure. He or she holds, and shall maintain, an active, unrestricted license to practice medicine in Illinois.
4.3 No Sanctions. He or she is not subject to any disciplinary action, exclusion, or sanctions by any governmental or regulatory authority.
4.4 No Conflicts. Execution and performance of this Agreement do not and will not violate any other agreement or obligation of the Partner.
4.5 Survival. All representations and warranties shall survive the execution of this Agreement for the longer of (a) four (4) years, or (b) the applicable statute of limitations.
5. COVENANTS & RESTRICTIONS
5.1 Maintenance of Licensure. Each Partner shall (a) renew his or her medical license timely, (b) complete CME, and (c) promptly notify the Partnership of any Regulatory Event.
5.2 Compliance Program. The Partnership shall implement and maintain a written compliance program consistent with OIG guidance.
5.3 Non-Competition. For a period of [12-24] months following a Partner’s withdrawal, such Partner shall not establish or join a competing medical practice within a radius of [X] miles of any Clinic, except as may be limited by 740 ILCS 23/1 et seq. (Illinois Freedom to Work Act) or other applicable law.
5.4 Non-Solicitation. During the term of this Agreement and for two (2) years thereafter, no Partner shall solicit or hire the Partnership’s employees, contractors, or patients, except as permitted under Section 5.3.
5.5 Confidentiality. “Confidential Information” includes patient data (subject to HIPAA and state privacy laws), trade secrets, and proprietary business information. Each Partner shall maintain such information in confidence and use it solely for Partnership purposes.
5.6 Notice & Cure. A Partner shall have ten (10) days to cure any breach of Section 5.1–5.5 after written notice, except breaches implicating patient safety, which shall require immediate action.
6. DEFAULT & REMEDIES
6.1 Events of Default. A Partner shall be in default (“Defaulting Partner”) upon:
(a) Failure to maintain licensure or occurrence of a Regulatory Event;
(b) Commission of a felony or crime of moral turpitude;
(c) Material breach of this Agreement not cured within the period stated in Section 5.6;
(d) Insolvency or bankruptcy;
(e) Death or Disability (as defined in Schedule IV).
6.2 Remedies. Upon an Event of Default:
(a) Suspension. The Defaulting Partner’s voting rights and compensation may be suspended immediately by the Non-Defaulting Partners.
(b) Forced Buy-Out. The Non-Defaulting Partners may purchase the Defaulting Partner’s Partnership Interest at the Default Price (Schedule V).
(c) Capital Call. To fund purchase of the Defaulting Partner’s Interest, the Non-Defaulting Partners may require proportional additional Capital Contributions.
(d) Specific Performance. The Non-Defaulting Partners may pursue injunctive relief under Section 8.4.
6.3 Attorneys’ Fees. The prevailing party in any action or proceeding arising under this Agreement shall recover its reasonable attorneys’ fees and costs.
6.4 Dissolution. The Partnership may be dissolved only upon (a) unanimous written consent of all Partners, or (b) as required by law following the loss of all licensure.
7. RISK ALLOCATION
7.1 Indemnification – Malpractice. Each Partner (“Indemnifying Partner”) shall indemnify, defend, and hold harmless the Partnership and the other Partners from and against any claim, demand, liability, cost, or expense (each, an “Indemnified Claim”) arising out of the Indemnifying Partner’s professional negligence or malpractice, to the extent not covered by Malpractice Insurance.
7.2 Limitation of Liability. Except for (a) malpractice, (b) fraud, or (c) willful misconduct, each Partner’s aggregate liability under this Agreement shall not exceed the limits of the Malpractice Insurance required under Section 7.3.
7.3 Insurance Requirements.
(a) Each Partner shall maintain individual or shared professional liability coverage with minimum limits of [AMOUNT] per claim and [AMOUNT] aggregate.
(b) The Partnership shall maintain general liability, cyber, and employment-related coverage as commercially reasonable.
7.4 Force Majeure. No Partner shall be liable for failure to perform due to events beyond their reasonable control (e.g., natural disasters, governmental orders), provided the affected Partner gives prompt notice and resumes performance as soon as practicable.
8. DISPUTE RESOLUTION
8.1 Governing Law. This Agreement and all claims related hereto shall be governed by the laws of the State of Illinois, without regard to conflict-of-laws principles.
8.2 Forum Selection. For any judicial action permitted under this Article 8, the parties irrevocably submit to the exclusive jurisdiction of the state courts located in [COUNTY], Illinois.
8.3 Arbitration. Except as provided in Sections 8.4 and 8.5, any controversy or claim arising out of or relating to this Agreement shall be resolved by confidential binding arbitration administered by the American Arbitration Association in accordance with its Healthcare Arbitration Rules (“Arbitration Rules”). The arbitral tribunal shall consist of one (1) arbitrator who is a licensed attorney with at least ten (10) years’ health-care experience. The seat of arbitration shall be [CITY], Illinois.
8.4 Injunctive Relief. Notwithstanding Section 8.3, either party may seek interim or emergency equitable relief (including temporary restraining orders and injunctions) in the state courts specified in Section 8.2 to preserve the status quo.
8.5 Jury Waiver. TO THE EXTENT NOT PROHIBITED BY LAW, EACH PARTY VOLUNTARILY, KNOWINGLY, AND IRREVOCABLY WAIVES ANY RIGHT TO A TRIAL BY JURY. [// GUIDANCE: Delete this sentence if the parties elect not to include a jury waiver.]
8.6 Confidentiality of Proceedings. All arbitration proceedings and related documents shall be confidential, except as necessary to enforce an award or as required by law.
9. GENERAL PROVISIONS
9.1 Amendments; Waivers. No amendment or waiver of any provision of this Agreement shall be effective unless in writing and executed by all Partners.
9.2 Assignment; Delegation. No Partner may assign, delegate, pledge, or otherwise transfer any Partnership Interest without the prior unanimous written consent of the other Partners.
9.3 Successors & Assigns. This Agreement shall inure to the benefit of and be binding upon the Partners and their respective heirs, legal representatives, and permitted assigns.
9.4 Severability. Any provision found invalid or unenforceable shall be severed and the remainder of the Agreement shall remain in full force, with the invalid provision reformed to the minimum extent necessary to effectuate the parties’ intent.
9.5 Entire Agreement. This Agreement, together with all Schedules and Exhibits, constitutes the entire agreement among the Partners regarding the subject matter hereof and supersedes all prior agreements, whether written or oral.
9.6 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which shall be deemed an original. Signatures delivered by electronic means (e.g., PDF, DocuSign) shall be deemed original signatures and fully enforceable.
9.7 Notices. All notices shall be in writing and delivered (a) personally, (b) by nationally recognized overnight courier, or (c) by certified mail (return receipt requested) to the addresses set forth below or such other address designated in writing.
9.8 Interpretation. Headings are for convenience only and shall not affect interpretation. The parties have jointly drafted this Agreement, and no presumption against the drafter shall apply.
10. EXECUTION BLOCK
IN WITNESS WHEREOF, the Partners have executed this Medical Practice Partnership Agreement effective as of the date first set forth above.
| Partner | Signature | Date |
|---|---|---|
| Dr. [NAME], M.D. | ______ | _____ |
| Dr. [NAME], M.D. | ______ | _____ |
[Optional Notary Acknowledgment—Illinois]
STATE OF ILLINOIS )
) SS.
COUNTY OF ____ )
On this _ day of _, 20__, before me, the undersigned notary public, personally appeared Dr. [NAME] and Dr. [NAME], known to me (or satisfactorily proven) to be the persons whose names are subscribed to within this instrument, and acknowledged that they executed the same for the purposes therein contained.
Notary Public
My Commission Expires: _____
SCHEDULES (Illustrative – Attach as Needed)
Schedule I – Initial Capital Contributions
Schedule II – Allocation of Profits/Losses
Schedule III – Compensation Formula
Schedule IV – Definition of “Disability”
Schedule V – Default Price Formula & Buy-Out Terms
Schedule VI – Insurance Certificates
[// GUIDANCE: Provide detailed formulas, valuation methods, and insurance certificates in the Schedules rather than the body to facilitate future updates.]