Indiana Medical Practice Partnership / Professional Entity Agreement

INDIANA MEDICAL PRACTICE PARTNERSHIP / PROFESSIONAL ENTITY AGREEMENT

This Medical Practice Partnership / Professional Entity Agreement (the "Agreement") is entered into as of [__/__/____] (the "Effective Date") by and among the persons identified on Schedule A (each, a "Member" or "Shareholder"; collectively, the "Owners"), each a physician licensed to practice medicine in the State of Indiana under IC § 25-22.5.

1. ENTITY FORMATION AND PURPOSE

Purpose. The exclusive purpose of the entity is to render the professional services of medicine and surgery as authorized under IC § 25-22.5, together with such ancillary lawful activities as are permitted to professional entities under Indiana law.

2. OWNERSHIP RESTRICTIONS

• 2.1 Eligible Owners. Each Owner shall at all times be a physician licensed in good standing under IC § 25-22.5, except as expressly permitted by IC § 23-1.5-2-3 or IC § 23-18.
• 2.2 Indiana License Required. At least one Owner shall hold an active Indiana medical license at all times.
• 2.3 Loss of Eligibility. If any Owner ceases to be eligible (license revocation, suspension exceeding [____] days, surrender, or death), the entity shall acquire that Owner's interest as provided in Section 9 within the period required by IC § 23-1.5 or IC § 23-18.

3. CAPITAL CONTRIBUTIONS AND INTERESTS

Additional capital calls require ☐ unanimous ☐ supermajority ([____]%) approval of Owners.

4. GOVERNANCE

• 4.1 Management. The entity shall be managed by ☐ all Owners ☐ a Board of Directors / Managers comprised of [____] persons, each licensed under IC § 25-22.5.
• 4.2 Officers. The Owners shall elect a President / Managing Partner, Secretary, and Treasurer, each of whom (other than Treasurer, where permitted) shall be a licensed Indiana physician.
• 4.3 Voting. Except where supermajority consent is required, action shall be by majority of percentage interests. Supermajority ([____]%) consent is required for: amendment of this Agreement; admission of new Owners; sale of substantially all assets; merger, conversion, or dissolution; incurrence of debt above $[__________]; and any decision affecting clinical scope of practice.
• 4.4 Clinical Decisions Reserved to Licensed Physicians. All clinical and professional decisions (diagnosis, treatment, referrals, peer review, credentialing, supervision of mid-level providers) shall be made exclusively by licensed Indiana physicians, consistent with IC § 25-22.5.

5. PROFESSIONAL STANDARDS AND COMPLIANCE

• 5.1 Licensure. Each Owner shall maintain an active, unrestricted Indiana medical license, DEA registration where applicable, hospital privileges as required, and all required CME.
• 5.2 Malpractice Coverage. Each Owner shall maintain coverage at limits of not less than $[__________]/$[__________], consistent with the Indiana Medical Malpractice Act (IC § 34-18) and any patient compensation fund surcharge requirements.
• 5.3 Compliance. The entity shall comply with HIPAA, HITECH, the Indiana Medical Practice Act, the Indiana False Claims Act, federal and Indiana Stark/Anti-Kickback analogs, and applicable Medical Licensing Board rules at 844 IAC.
• 5.4 Reporting. Owners shall promptly report to the entity any malpractice claim, board investigation, license action, exclusion, conviction, or DEA action affecting them.

6. FEE DIVISION AND COMPENSATION

• 6.1 Internal Compensation. Compensation among Owners as partners, employees, or shareholders of this entity shall be determined under Schedule B (productivity / base / bonus) and is not "fee division" prohibited by 844 IAC 5-2-10.
• 6.2 No Prohibited Fee Splitting. No Owner or the entity shall divide a professional fee with any practitioner who is not a partner, employee, or shareholder of the entity except in compliance with 844 IAC 5-2-10 and any applicable subsection of IC § 25-22.5 governing unprofessional conduct.
• 6.3 No Kickbacks or Referral Fees. No Owner shall solicit, offer, pay, or receive remuneration in exchange for referrals in violation of federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b), Stark Law (42 U.S.C. § 1395nn), or Indiana law.

7. CLINICAL OPERATIONS, RECORDS, AND PATIENTS

• 7.1 Patient Records. Patient records are property of the entity and shall be maintained per IC § 16-39 and applicable retention rules. On Owner departure, the entity shall provide departing Owner reasonable access for the period required by Section 8 and IC § 25-22.5-5.5(d) (physician access to records of patients treated within the prior two years, upon patient consent).
• 7.2 EMR / IT. The entity shall maintain HIPAA-compliant systems and a Notice of Privacy Practices.
• 7.3 Patient Solicitation. During and after employment, no Owner shall improperly access or use patient lists in violation of HIPAA or trade-secret law; provided that nothing in this Agreement shall be construed to restrict a departing physician's lawful continuation of patient relationships to the extent protected under IC § 25-22.5-5.5.

8. PHYSICIAN NONCOMPETE AND DEPARTURE PROVISIONS (IC § 25-22.5-5.5)

• 8.1 Applicability. Sections 8.2–8.6 apply only if Owners elect to include a noncompete and the entity is not a "hospital, hospital system, parent of a hospital, or affiliated manager" within the meaning of IC § 25-22.5-5.5 as amended by SEA 475 (2025). If the entity is so affiliated, no enforceable noncompete shall apply and Owners shall rely solely on lawful non-disclosure and non-solicitation protections.
• 8.2 Mandatory Statutory Provisions. Any noncompete shall comply with IC § 25-22.5-5.5 and shall include:
• (a) Patient notice copy: the entity shall provide the departing physician a copy of any notice sent to a patient treated within the prior two (2) years concerning the physician's departure.
• (b) Physician contact information: the entity shall, in good faith, provide the departing physician's last known contact information to any patient treated within the prior two (2) years who requests it.
• (c) Medical records access: the entity shall provide a mechanism by which the departing physician may obtain medical records of patients treated within the prior two (2) years, subject to patient consent.
• (d) Buy-out option: the departing physician shall have the option to purchase a complete and full release from the noncompete at a reasonable price, with mediation/arbitration of valuation disputes as required by statute.
• (e) Other terms required by current IC § 25-22.5-5.5 (verify): [________________________________]
• 8.3 Geographic and Temporal Scope (if any). Geographic radius: [____] miles from [________________________________]. Duration: [____] months, not to exceed limits permitted under Indiana common law and statute.
• 8.4 Carve-outs from "Noncompete." As permitted under SEA 475 (2025), this Agreement does not treat as a "noncompete" (i) confidentiality / trade secret protection, (ii) employee non-solicitation for up to one (1) year that does not restrict patient interactions, referrals, or clinical collaboration, or (iii) restrictions tied to a bona fide sale where the physician owned more than fifty percent (50%) of the entity at sale.
• 8.5 Primary Care Physicians. For physicians practicing in primary care specialties as defined by Indiana law, additional restrictions under the 2023 amendments apply and must be honored.
• 8.6 Severability. Any provision found unenforceable under IC § 25-22.5-5.5 shall be severed without affecting the remainder of the Agreement.

9. TRANSFER, WITHDRAWAL, DEATH, DISABILITY, AND BUY-OUT

• 9.1 Restrictions on Transfer. No Owner may transfer any interest except (a) to the entity, (b) to another eligible Indiana-licensed physician approved by [supermajority] of the remaining Owners, or (c) by operation of law subject to mandatory redemption.
• 9.2 Triggering Events. Mandatory redemption applies on: death; permanent disability ([____] consecutive months); license revocation, surrender, or suspension exceeding [____] days; exclusion from Medicare/Medicaid; voluntary withdrawal on [____] days' notice; or termination for cause.
• 9.3 Valuation Method. ☐ Agreed value updated annually ☐ Independent appraisal ☐ Formula: [____________________].
• 9.4 Payment Terms. Down payment of [____]% with the balance over [____] months at [____]% interest, secured by [________________________________].
• 9.5 Insurance Funding. The entity may maintain life and disability insurance on each Owner to fund redemption.

10. TAIL COVERAGE AND MALPRACTICE

On departure, the departing Owner shall obtain (or the entity shall procure and allocate cost of) extended reporting / "tail" coverage for prior-acts liability, in compliance with IC § 34-18 and the Indiana Patient's Compensation Fund.

11. DISPUTE RESOLUTION

• 11.1 Negotiation, then Mediation, then Arbitration. Disputes shall first be discussed in good faith for [____] days, then submitted to mediation in [________], Indiana, and finally to binding arbitration administered by [________] under [JAMS / AAA] rules.
• 11.2 Carve-outs. Either party may seek injunctive relief in Indiana state court for breach of confidentiality, trade-secret, or Section 8 obligations.
• 11.3 Statutory Disputes Under IC § 25-22.5-5.5. Buy-out price disputes shall be resolved as provided in the statute.

12. GENERAL PROVISIONS

• 12.1 Governing Law. This Agreement is governed by Indiana law without regard to conflict-of-laws rules.
• 12.2 Venue. Exclusive venue lies in [____________________] County, Indiana.
• 12.3 Amendment. Amendments require [supermajority/unanimous] written consent of Owners.
• 12.4 Severability. If any provision is invalid, the remainder remains enforceable.
• 12.5 Entire Agreement. This Agreement (with Schedules) is the entire agreement of the Owners regarding its subject matter.

13. SIGNATURES

SCHEDULE A — OWNERS, INTERESTS, AND CONTRIBUTIONS

[________________________________]

SCHEDULE B — COMPENSATION FORMULA

[________________________________]

SCHEDULE C — FORM OF NONCOMPETE PROVISION (IC § 25-22.5-5.5 COMPLIANT)

[________________________________]

SOURCES AND REFERENCES

• Indiana Professional Corporation Act, IC § 23-1.5 (formation, ownership, naming)
• Indiana Business Flexibility Act, IC § 23-18 (LLCs and professional services, IC § 23-18-2-2 and -3)
• Indiana Code IC § 23-0.5-3-2 (entity naming requirements; restricted use of "medical")
• Indiana Medical Practice Act, IC § 25-22.5 (including IC § 25-22.5-1-1.1 definitions and unprofessional conduct — verify fee-division subsection)
• 844 IAC 5-2-10 (fee division rule)
• IC § 25-22.5-5.5 (physician noncompete agreements — SEA 7 (2020); 2023 amendments; Senate Enrolled Act 475 (2025), effective July 1, 2025, prohibiting hospital-physician noncompetes)
• Indiana Medical Malpractice Act, IC § 34-18, and Indiana Patient's Compensation Fund
• 42 U.S.C. § 1320a-7b (Anti-Kickback) and 42 U.S.C. § 1395nn (Stark)