Medical Practice Partnership Agreement (Kentucky)

MEDICAL PRACTICE PARTNERSHIP AGREEMENT

(Commonwealth of Kentucky — Court-Ready Template)

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 (including Non-Competition)
6. Default & Remedies
7. Risk Allocation
8. Dispute Resolution
9. General Provisions
10. Execution Block

1. DOCUMENT HEADER

MEDICAL PRACTICE PARTNERSHIP AGREEMENT (this "Agreement") is entered into as of [EFFECTIVE DATE] (the "Effective Date") by and among [FULL LEGAL NAME OF PARTNER A, M.D./D.O.], [FULL LEGAL NAME OF PARTNER B, M.D./D.O.], and any other persons admitted as Partners hereunder (each a "Partner"; collectively, the "Partners").

RECITALS

A. Each Partner holds an active, unrestricted license to practice medicine or osteopathy in the Commonwealth of Kentucky issued by the Kentucky Board of Medical Licensure ("KBML") under KRS Chapter 311.
B. The Partners desire to associate as a professional partnership for the practice of medicine and to govern their relationship under this Agreement.
C. The Partners intend that this Agreement comply with all applicable Kentucky and federal laws, including KRS Chapter 311, KRS Chapter 362 (partnerships), KRS Chapter 274 (PSCs) and/or KRS § 275.001 et seq. (PLLCs), the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), and the Stark Law (42 U.S.C. § 1395nn).

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

2. DEFINITIONS

"Affiliate" — any Person directly or indirectly controlling, controlled by, or under common control with a specified Person.

"Applicable Law" — KRS Chapter 311 (Kentucky Medical Practice Act); KRS § 311.595 (license discipline and fee-splitting); KRS Chapter 274 (Kentucky Professional Service Corporation Act); KRS § 275.001 et seq., including § 275.090 (Kentucky LLC Act, professional services); KRS Chapter 362 (Kentucky Uniform/Revised Uniform Partnership Act); KAR Title 201, Chapters 9 (KBML regulations); the federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b); and Stark Law, 42 U.S.C. § 1395nn; together with all other federal, state, and local laws applicable to the Practice.

"Capital Account" — each Partner's capital account maintained in accordance with Section 3.2.

"Claim" — any demand, action, suit, proceeding, or investigation, civil, criminal, or administrative.

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

"KBML" — the Kentucky Board of Medical Licensure.

"Malpractice Claim" — any Claim alleging professional negligence or violation of professional standards in connection with medical services.

"Person" — any individual, corporation, partnership, limited liability company, trust, or other entity.

"Practice" — the medical practice operated by the Partnership under this Agreement.

3. OPERATIVE PROVISIONS

3.1 Formation, Name, Purpose & Term

3.1.1 Formation. The Partners form a professional partnership under KRS Chapter 362.
3.1.2 Name. The Partnership shall conduct business under [PRACTICE NAME], registered as required with the Kentucky Secretary of State and any applicable assumed-name filings.
3.1.3 Purpose. The exclusive purpose is the practice of medicine and lawful ancillary activities. The Partnership shall not engage in any activity prohibited by KRS Chapter 311 or that constitutes the unlicensed practice of medicine under KRS § 311.560.
3.1.4 Term. The Partnership commences on the Effective Date and continues until dissolved under this Agreement or Applicable Law.

3.2 Capital Contributions

(a) Initial Contributions. Each Partner shall contribute the cash or property listed on Schedule 1 on the Effective Date.
(b) Additional Contributions. No Partner shall be required to contribute additional capital except by approval of [SUPER-MAJORITY THRESHOLD] of Partners.

3.3 Allocation of Profits & Losses; Distributions

(a) Allocation. Profits and losses are allocated in proportion to Percentage Interests on Schedule 1, except as required by the Internal Revenue Code.
(b) Distributions. Subject to reserves, available cash is distributed at least [QUARTERLY/MONTHLY].

3.4 Management & Voting

3.4.1 Managing Partner(s). [NAME OR SELECTION MECHANISM] serves as Managing Partner.
3.4.2 Authority. The Managing Partner oversees day-to-day operations subject to Schedule 2 (Reserved Matters).
3.4.3 Voting. Unless otherwise specified, action requires [SIMPLE / SUPER-MAJORITY] of Percentage Interests. Each Partner has one vote per Percentage Interest.
3.4.4 Clinical Independence. No business decision shall override a Partner's independent professional medical judgment.

3.5 Practice Licensing & Regulatory Compliance

(a) Licensure. Each Partner shall maintain an unrestricted KBML license at all times.
(b) Entity Compliance. The Partnership shall make all required filings with the Kentucky Secretary of State, register any assumed names, and maintain compliance with KAR Title 201, Chapter 9.
(c) Ownership Limitations. All Partners shall be Kentucky-licensed physicians or other professionals authorized under Applicable Law to render the relevant professional services.
(d) CME and Standards. Each Partner shall complete required continuing medical education and comply with the Medical Practice Act and KBML standards.

3.6 Compensation Methodology; Fee-Splitting Safeguards

(a) Compensation Policy. Partner compensation is determined under Schedule 3 (Compensation Formula) and is based on bona fide services rendered.
(b) Fee-Splitting Compliance — KRS § 311.595(9). No Partner shall pay or receive any fee, commission, rebate, or other compensation for patient referrals. KRS § 311.595(9) permits fee division among licensed practitioners (i) where the patient has full knowledge of the division and (ii) the division is in proportion to the services performed and responsibility assumed, and expressly permits Partners to pool, share, divide, or apportion fees received from the Practice.
(c) Federal Compliance. All compensation arrangements shall comply with the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)) and the Stark Law (42 U.S.C. § 1395nn), including any in-office ancillary services exception.
(d) Billing. The Partnership shall bill in its own name and comply with all federal and state fraud-and-abuse laws and Medicaid/Medicare regulations.

3.7 Books, Records & Accounting

(a) Fiscal Year. Ends [DATE].
(b) GAAP. Books are maintained on the accrual or cash basis as approved by the Partners and in accordance with GAAP to the extent practicable.
(c) Inspection. Each Partner may inspect and copy books and records on reasonable notice.

3.8 Banking & Spending Authority

All funds shall be deposited in accounts in the Partnership's name. Disbursements above [$ THRESHOLD] require two authorized signatories (at least one Managing Partner).

3.9 Partner Duties; Time Commitment; Outside Activities

(a) Fiduciary Duties. Each Partner owes the duties of loyalty, care, and good faith under KRS Chapter 362.
(b) Minimum Clinical Hours. Not less than [HOURS/WEEK].
(c) Outside Activities. Permitted only if not in conflict with Section 5.3 (Non-Competition) or fiduciary duties.

3.10 Admission, Withdrawal & Buy-Sell

Admission, voluntary withdrawal, expulsion, disability, death, and mandatory buy-sell are governed by Schedule 4 (Buy-Sell Provisions), including valuation method, payment terms, and tail-coverage requirements.

4. REPRESENTATIONS & WARRANTIES

4.1 By Each Partner. Each Partner represents and warrants:
(a) Licensure. Active, unrestricted KBML license under KRS Chapter 311.
(b) No Discipline. Not subject to any pending or final disciplinary action by KBML, DEA, Medicare, Medicaid, or any other governmental body except as disclosed on Schedule 6.
(c) Authority. Full power and authority to enter into this Agreement.
(d) No Conflicts. Execution does not violate any other agreement, restrictive covenant, or court order binding on the Partner.

4.2 Survival. Representations survive [X] years after a Partner ceases to be a Partner.

5. COVENANTS & RESTRICTIONS

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

5.2 Confidentiality. Partners shall maintain patient confidentiality (HIPAA; 902 KAR 20:016) and protect Partnership proprietary information.

5.3 Non-Competition & Non-Solicitation.
(a) Restrictive Covenant. During the term and for [TWO (2)] years following a Partner's withdrawal, no former Partner shall establish or join a competing medical practice within a [15-MILE] radius of any Partnership office.
(b) Non-Solicitation. No former Partner shall solicit patients, employees, or referral sources of the Partnership during the same period.
(c) Consideration — Charles T. Creech, Inc. v. Brown. The Partners acknowledge that under Charles T. Creech, Inc. v. Brown, 433 S.W.3d 345 (Ky. 2014), continued employment alone is not sufficient consideration for a Kentucky non-compete. The Partners agree that the consideration for this restrictive covenant includes (i) admission to or continued status in the Partnership; (ii) access to confidential patient lists, referral relationships, proprietary clinical protocols, and goodwill; (iii) profit-sharing rights; and (iv) the bargained-for exchange set forth in Schedule 7 (Restrictive Covenant Consideration).
(d) Reformation. If any court finds any portion of this Section 5.3 unenforceable, the parties consent to judicial reformation to the maximum extent enforceable under Kentucky law.
(e) Buy-Out Alternative. A withdrawing Partner may elect to pay liquidated consideration as set on Schedule 4 in lieu of compliance with Section 5.3, if approved by the remaining Partners.

5.4 Notice & Cure of Regulatory Issues. A Partner receiving notice of any KBML investigation, malpractice claim, or governmental disciplinary action shall notify the Managing Partner within [5] business days and cooperate in any remediation.

6. DEFAULT & REMEDIES

6.1 Events of Default.
(a) Material breach not cured within [30] days after written notice;
(b) Loss, suspension, or material restriction of KBML license;
(c) Conviction of a felony or crime of moral turpitude;
(d) Exclusion from Medicare, Medicaid, or other federal healthcare programs;
(e) Gross negligence or willful misconduct causing material harm.

6.2 Remedies. The non-defaulting Partners may (a) suspend voting and distribution rights; (b) require buy-out under Schedule 4; (c) seek injunctive relief or specific performance, including enforcement of Section 5.3; (d) recover damages, costs, and reasonable attorneys' fees.

7. RISK ALLOCATION

7.1 Malpractice Indemnification. Each Partner shall indemnify, defend, and hold harmless the Partnership and the other Partners from Malpractice Claims arising from such Partner's professional acts or omissions, except to the extent covered by Partnership professional liability insurance.

7.2 Limitation of Liability. Subject to mandatory rules of law, aggregate liability of any Partner to the Partnership for Malpractice Claims shall not exceed the greater of (a) the limits of professional liability insurance maintained by such Partner under Section 7.3, or (b) [$ AMOUNT].

7.3 Insurance.
(a) Minimum Coverage. [$1,000,000 per claim / $3,000,000 aggregate] professional liability.
(b) Tail Coverage. Departing Partners shall procure tail coverage for not less than [X] years post-departure or pay the cost of such coverage to the Partnership.

7.4 Force Majeure. No Partner is liable for non-performance (other than payment) due to events beyond reasonable control (acts of God, pandemic, governmental order, labor dispute), provided commercially reasonable efforts to mitigate are used.

8. DISPUTE RESOLUTION

8.1 Governing Law. Commonwealth of Kentucky, without regard to conflicts-of-law principles.

8.2 Forum Selection. Exclusive venue in the state courts of [COUNTY], Kentucky, except as provided in Section 8.3.

8.3 Arbitration. Except for actions for injunctive relief under Sections 5 or 6 and collection of undisputed monetary obligations, all disputes shall be resolved by binding arbitration administered by [ARBITRATION PROVIDER] under its healthcare rules and the Kentucky Uniform Arbitration Act, KRS § 417.045 et seq.
(a) Location. [CITY], Kentucky.
(b) Arbitrator. A retired judge or attorney with at least ten (10) years' experience in healthcare law.
(c) Discovery. Limited to that necessary for fair resolution.
(d) Award. Final; judgment may be entered in any court of competent jurisdiction.

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

8.5 Injunctive Relief. Each Partner acknowledges that breach of Sections 5.2 (Confidentiality) or 5.3 (Non-Competition / Non-Solicitation) would cause irreparable harm and that injunctive relief may issue without a bond.

9. GENERAL PROVISIONS

9.1 Amendments. Only by written instrument signed by Partners holding [SUPER-MAJORITY THRESHOLD].
9.2 Assignment. No Partner may assign or encumber its Partnership Interest except as expressly permitted.
9.3 Successors & Assigns. Binds and benefits the parties and permitted successors and assigns.
9.4 Severability. If any provision is invalid, it shall be reformed to the minimum extent necessary.
9.5 Integration. This Agreement, with its Schedules, is the entire agreement on its subject matter.
9.6 Counterparts; Electronic Signatures. Permissible under the Kentucky Uniform Electronic Transactions Act, KRS § 369.101 et seq.
9.7 Notices. In writing; delivered by personal service, certified mail (return receipt), nationally recognized overnight courier, or e-mail with confirmation of receipt, to the addresses on Schedule 5.

10. EXECUTION BLOCK

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

Acknowledgment of Restrictive Covenant Consideration

By initialing below, each Partner specifically acknowledges receipt of independent consideration for the restrictive covenants in Section 5.3, satisfying the consideration requirement under Charles T. Creech, Inc. v. Brown, 433 S.W.3d 345 (Ky. 2014).

SCHEDULE 1 — Capital Contributions, Percentage Interests, Initial Capital Accounts

SCHEDULE 2 — Reserved Matters Requiring Partner Approval

[Sale of substantial assets; debt above $X; relocation of main office; amendment of compensation formula; admission/expulsion of Partners; tax elections; merger or dissolution.]

SCHEDULE 3 — Compensation Formula

[RVU-based, collections-based, salary-plus-bonus, or hybrid methodology. Define productivity metrics and timing. Confirm consistency with KRS § 311.595(9), Anti-Kickback Statute, and Stark Law.]

SCHEDULE 4 — Buy-Sell Provisions

[Valuation method (multiple of collections, appraisal, formula); payment terms; triggering events (death, disability, retirement, expulsion, voluntary withdrawal); security; tail-coverage allocation.]

SCHEDULE 5 — Notice Information

SCHEDULE 6 — Disclosure Schedule (Discipline / Pending Matters)

[Identify any pending or prior KBML, DEA, payer, or governmental matters per Section 4.1(b).]

SCHEDULE 7 — Restrictive Covenant Consideration

[Specifically itemize consideration provided to each Partner for the Section 5.3 covenants beyond mere employment/admission, e.g., sign-on bonus, equity grant, access to confidential client lists, training, or partner buy-in credit. Required under Charles T. Creech, Inc. v. Brown.]

SOURCES AND REFERENCES

• KRS Chapter 311 (Kentucky Medical Practice Act)
• KRS § 311.560 (Unlicensed practice of medicine)
• KRS § 311.595 (License discipline; § 311.595(9) — fee splitting)
• KRS Chapter 274 (Kentucky Professional Service Corporation Act)
• KRS § 275.001 et seq.; KRS § 275.090 (PLLCs rendering professional services)
• KRS Chapter 362 (Kentucky Uniform / Revised Uniform Partnership Act)
• KRS § 369.101 et seq. (Kentucky Uniform Electronic Transactions Act)
• KRS § 417.045 et seq. (Kentucky Uniform Arbitration Act)
• 201 KAR Chapter 9 (KBML regulations)
• Charles T. Creech, Inc. v. Brown, 433 S.W.3d 345 (Ky. 2014)
• 42 U.S.C. § 1320a-7b(b) (federal Anti-Kickback Statute)
• 42 U.S.C. § 1395nn (Stark Law)