Kansas Medical Practice Partnership Agreement

KANSAS MEDICAL PRACTICE PARTNERSHIP AGREEMENT

This Medical Practice Partnership Agreement ("Agreement") is entered into as of [__/__/____] (the "Effective Date") by and among the physicians identified on Schedule A (each a "Partner" and collectively the "Partners"), each of whom is licensed to practice medicine and surgery (or osteopathic medicine and surgery) under the Kansas Healing Arts Act, K.S.A. 65-2801 et seq.

I. FORMATION AND ENTITY STRUCTURE

A. Entity. The Partners hereby [form / continue] [select one]:

☐ A Professional Corporation under the Kansas Professional Corporation Law of 1965, K.S.A. 17-2706 et seq.
☐ A Professional Limited Liability Company under the Kansas Revised LLC Act, K.S.A. 17-7662 et seq., organized to render professional services.
☐ A General Partnership under the Kansas Uniform Partnership Act, K.S.A. 56a-101 et seq.
☐ A Limited Liability Partnership under K.S.A. 56a-1001 et seq.

(the "Practice").

B. Name. The name of the Practice is: [____________].

C. Principal Office. [STREET ADDRESS, CITY, KANSAS, ZIP].

D. Corporate Practice of Medicine. Consistent with Early Detection Center, Inc. v. Wilson, 248 Kan. 869, 811 P.2d 860 (1991), only persons duly licensed to practice the healing arts in Kansas may be Partners, equity owners, directors, or officers of the Practice, and only such licensed persons may exercise control over the professional medical judgment of the Practice. No general (non-professional) corporation may own equity in or control the Practice.

E. Licensing Body Certificate. Upon formation, the Practice shall file with the Kansas Secretary of State a certificate from the Kansas State Board of Healing Arts confirming that each Partner is duly licensed, as required for professional entities.

II. PURPOSE AND SCOPE

A. The exclusive purpose of the Practice is the rendering of professional medical services within the Partners' respective specialties, and activities ancillary thereto permitted under the Kansas Healing Arts Act and applicable Kansas Board of Healing Arts regulations (K.A.R. 100-).

B. Specialty / Scope of Services: [____________].

III. CAPITAL CONTRIBUTIONS AND OWNERSHIP

A. Initial Contributions. Each Partner shall contribute the cash, property, or services set forth on Schedule A in exchange for the ownership interest stated thereon.

B. Ownership Percentages. Set forth on Schedule A.

C. Additional Contributions. Required only upon unanimous written consent of the Partners, except as required by law for entity solvency.

D. Capital Accounts. A separate capital account shall be maintained for each Partner consistent with Treas. Reg. § 1.704-1(b)(2)(iv).

IV. MANAGEMENT AND GOVERNANCE

A. Board of Managers / Directors. Management of the Practice is vested in a Board composed exclusively of Kansas-licensed Partners. Each Partner has one vote unless otherwise stated in Schedule A.

B. Officers. Officers shall be: President / Managing Partner [____________]; Secretary [____________]; Treasurer [____________].

C. Voting Thresholds. The following actions require unanimous Partner approval:

D. Professional Independence. No business, financial, or administrative decision shall override the independent professional medical judgment of any Partner with respect to a particular patient.

V. COMPENSATION AND DISTRIBUTIONS

A. Compensation Methodology. Each Partner shall be compensated based on [productivity (wRVU) / equal share / hybrid] as set forth on Schedule B. Compensation shall be consistent with fair-market value and commercial reasonableness.

B. No Fee-Splitting. Consistent with K.S.A. 65-2837(b) (defining unprofessional conduct under the Kansas Healing Arts Act), no Partner shall directly or indirectly give or receive any fee, commission, rebate, or other compensation for professional services not actually and personally rendered, except through the lawful operation of the Practice as a recognized professional entity.

C. Stark / AKS Compliance. All compensation arrangements shall comply with the federal physician self-referral law (Stark, 42 U.S.C. § 1395nn) and the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b), including applicable safe harbors and exceptions (e.g., bona-fide-employment, in-office-ancillary-services, group-practice).

D. Designated Health Services. Any compensation linked to the volume or value of referrals for designated health services is prohibited unless squarely within a Stark exception.

E. Distributions. Cash distributions shall be made [quarterly / monthly] in proportion to ownership, subject to retention of working capital and reserves established by the Board.

VI. PARTNER DUTIES AND PROFESSIONAL OBLIGATIONS

A. Each Partner shall:

☐ Maintain an unrestricted, active Kansas Healing Arts license.
☐ Maintain DEA registration where applicable.
☐ Maintain board certification in the Partner's specialty (or be actively pursuing it).
☐ Maintain medical-staff privileges at [____________].
☐ Comply with all applicable federal and Kansas law, including HIPAA, 42 C.F.R. Part 2, the Kansas Healing Arts Act, and Board of Healing Arts regulations.
☐ Carry the malpractice coverage required by Section VII.
☐ Devote substantially full professional time to the Practice (or as set on Schedule A).
☐ Not engage in fee-splitting, kickbacks, or other conduct prohibited by K.S.A. 65-2837 or federal fraud-and-abuse law.

VII. PROFESSIONAL LIABILITY INSURANCE AND HCSF

A. Required Coverage. Each Partner shall maintain primary professional liability coverage at the limits required by the Kansas Health Care Stabilization Fund Act, K.S.A. 40-3401 et seq. (currently $200,000/$600,000 primary, with HCSF excess coverage).

B. HCSF Compliance. Each Partner shall comply with all assessment, surcharge, and reporting requirements of the Health Care Stabilization Fund.

C. Tail / Nose Coverage. Upon withdrawal of a Partner, the withdrawing Partner shall procure tail coverage (or the Practice shall procure nose coverage) covering the period of the Partner's affiliation with the Practice. Cost allocation: [____________].

VIII. RESTRICTIVE COVENANTS

A. Non-Compete. During the term of this Agreement and for [12 / 18 / 24] months after a Partner ceases to be associated with the Practice, the former Partner shall not, directly or indirectly, practice [SPECIALTY] within a [___]-mile radius of [PRIMARY OFFICE LOCATION] in Kansas. Other practice areas of medicine within the restricted territory are not prohibited.

B. Non-Solicitation. For [24] months after departure, the former Partner shall not solicit (i) patients seen at the Practice during the [24] months preceding departure, or (ii) Practice employees or contractors.

C. Confidentiality. Each Partner shall hold in confidence all non-public Practice information, including patient lists, fee schedules, payor contracts, and operational know-how, both during and after the Partner's affiliation, except for use in continued treatment of patients consistent with HIPAA and applicable law.

D. Reasonableness; Reformation. The Partners stipulate the foregoing restrictions are reasonable in time, geography, and scope, are necessary to protect the Practice's legitimate interests, and do not impose undue hardship on the Partner or harm the public welfare. Consistent with Weber v. Tillman, 259 Kan. 457 (1996), if any restriction is held overbroad, the court is requested to reform (blue-pencil) the restriction to the extent enforceable.

E. Public-Welfare Carve-Out. Nothing herein restricts a former Partner from continuing to provide care to a patient where withdrawal would constitute abandonment under K.A.R. 100-22-7 or otherwise harm the patient.

IX. ADMISSION, WITHDRAWAL, AND EXPULSION OF PARTNERS

A. Admission. New Partners admitted only upon unanimous consent and only if Kansas-licensed.

B. Voluntary Withdrawal. A Partner may withdraw on [90 / 180] days' written notice; buyout per Section X.

C. Mandatory Withdrawal Events. A Partner shall be deemed withdrawn upon:

☐ Death.
☐ Permanent disability (as defined in Schedule C).
☐ Loss, suspension, surrender, or material restriction of Kansas Healing Arts license.
☐ Loss of DEA registration (if applicable to Partner's practice).
☐ Exclusion from Medicare, Medicaid, or any federal health-care program (42 U.S.C. § 1320a-7).
☐ Felony conviction or conviction of a crime involving moral turpitude or controlled substances.
☐ Material uncured breach of this Agreement.

D. Expulsion. Expulsion for cause requires [supermajority / unanimous excluding the affected Partner] vote, with notice and opportunity to be heard.

X. BUYOUT / PURCHASE OF DEPARTING PARTNER'S INTEREST

A. Valuation Method. Departing Partner's interest shall be purchased at:

☐ Book value
☐ Formula valuation set on Schedule D
☐ Independent appraisal (cost shared equally)

B. Goodwill. [Excluded / Included] (institutional vs. personal goodwill addressed on Schedule D).

C. Payment Terms. [Lump sum / Installments over ___ years at ___% interest].

D. Stark / AKS. Buyout terms shall be set at fair-market value and shall not vary based on volume or value of referrals.

XI. RECORDS AND PATIENT CHOICE

A. Ownership of Records. Patient medical records are owned by the Practice; Partners have access for legitimate professional and legal purposes.

B. Patient Notification on Departure. Upon a Partner's departure, the Practice and the Partner shall jointly provide notice to active patients consistent with K.A.R. 100-24-1 (continuity-of-care obligations) and AMA ethical guidance, and shall not interfere with patient choice of provider.

XII. DISPUTE RESOLUTION

A. Negotiation; Mediation. Disputes shall first be referred to good-faith negotiation, then to non-binding mediation in [COUNTY], Kansas.

B. Arbitration / Litigation. Unresolved disputes shall be [arbitrated under JAMS / AAA Commercial Rules / litigated in the District Court of [____________] County, Kansas]. Each party submits to personal jurisdiction and venue therein.

C. Governing Law. This Agreement is governed by the laws of the State of Kansas, without regard to conflict-of-laws principles.

D. Equitable Relief. Breach of Sections VIII (Restrictive Covenants) and Confidentiality may cause irreparable harm; the non-breaching party may seek injunctive relief without bond.

XIII. GENERAL PROVISIONS

A. Entire Agreement. This Agreement, including its Schedules, is the entire agreement among the Partners regarding the subject matter.

B. Amendment. Only by writing executed by all Partners.

C. Severability. Invalidity of any provision does not affect the remainder; courts are requested to reform overbroad provisions to the extent enforceable.

D. Notices. As set forth on Schedule A.

E. Counterparts; Electronic Signatures. Permitted under K.S.A. 16-1601 et seq. (Uniform Electronic Transactions Act).

F. No Third-Party Beneficiaries.

XIV. EXECUTION

SCHEDULES

• Schedule A - Partners, Capital Contributions, Ownership Percentages, Notice Addresses
• Schedule B - Compensation Methodology
• Schedule C - Disability Definition and Determination Procedure
• Schedule D - Buyout Valuation Formula

SOURCES AND REFERENCES

• Early Detection Center, Inc. v. Wilson, 248 Kan. 869, 811 P.2d 860 (1991)
• Weber v. Tillman, 259 Kan. 457, 913 P.2d 84 (1996)
• Idbeis v. Wichita Surgical Specialists, P.A., 279 Kan. 755, 112 P.3d 81 (2005)
• Kansas Professional Corporation Law, K.S.A. 17-2706 et seq.
• Kansas Revised Limited Liability Company Act, K.S.A. 17-7662 et seq.
• Kansas Healing Arts Act, K.S.A. 65-2801 et seq.; K.S.A. 65-2837 (unprofessional conduct/fee-splitting)
• Kansas Health Care Stabilization Fund Act, K.S.A. 40-3401 et seq.
• Federal Stark Law, 42 U.S.C. § 1395nn; Anti-Kickback Statute, 42 U.S.C. § 1320a-7b

END OF AGREEMENT