Louisiana Medical Practice Partnership / Professional Entity Agreement

LOUISIANA MEDICAL PRACTICE PARTNERSHIP / PROFESSIONAL ENTITY AGREEMENT

PART 1 — FORMATION

This Agreement is entered into on [__/__/____] by and among the persons listed in Schedule A (each a "Member" or "Shareholder"; collectively the "Members"), each a Louisiana-licensed physician in good standing.

PART 2 — PURPOSE AND OWNERSHIP RESTRICTION

Section 2.1 — Purpose. The sole and specific purpose of the Entity is the practice of medicine through licensed physicians, consistent with La. R.S. § 12:902 and the Louisiana Medical Practice Act, La. R.S. § 37:1261 et seq.

Section 2.2 — Ownership Restriction. Only natural persons duly licensed to practice medicine in Louisiana may hold equity, voting interests, or directorships in the Entity. No transfer of an interest to any non-physician shall be effective. Any purported transfer in violation of this section is void ab initio.

Section 2.3 — Compliance with Corporate Practice of Medicine. The Entity, its Members, and any contracted Management Services Organization ("MSO") shall observe the corporate-practice-of-medicine doctrine. Clinical decisions, treatment protocols, peer review, and the physician-patient relationship remain exclusively under physician control.

PART 3 — CAPITAL CONTRIBUTIONS AND EQUITY

Additional capital calls require [____]% Member approval. No Member may pledge or encumber an equity interest without unanimous written consent.

PART 4 — GOVERNANCE

Section 4.1 — Management. The Entity shall be ☐ member-managed ☐ manager-managed by a Board of Directors / Managers consisting of [____] Louisiana-licensed physicians.

Section 4.2 — Voting. Each Member holds one vote per [percentage point of equity / per Member]. Ordinary matters require a simple majority. The following require [supermajority / unanimous] approval:

• ☐ Admission of new Members
• ☐ Sale of substantially all assets or merger
• ☐ Amendment of this Agreement or governing documents
• ☐ Borrowing in excess of $[________]
• ☐ Approval or amendment of any MSO agreement
• ☐ Dissolution

Section 4.3 — Officers. The Entity shall designate a President / Managing Member, a Secretary, and a Treasurer/CFO, each of whom (other than Treasurer/CFO if delegated to a non-physician administrator) must be a Member.

PART 5 — COMPENSATION AND FEE-SPLITTING COMPLIANCE

Section 5.1 — Physician Compensation. Members shall be compensated based on a methodology that complies with La. R.S. § 37:1285(A)(20), the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b), and the Stark Law (42 U.S.C. § 1395nn). Permissible methodologies include:

• ☐ Personally performed services productivity (wRVU or collections from personally performed services)
• ☐ Equal salary plus profit distribution by ownership
• ☐ Hybrid: base salary plus production bonus

Section 5.2 — No Fee Splitting. No portion of professional fees shall be paid, directly or indirectly, to any unlicensed person or entity in violation of La. R.S. § 37:1285(A)(20) or La. Admin. Code tit. 46, § LI-111. Any MSO fee shall be a fair-market-value fee that is fixed in advance or set on a basis that does not vary with the volume or value of referrals or business generated.

Section 5.3 — Distributions. Net profits shall be distributed [quarterly / annually] in proportion to ownership, after retention of working capital reserves of $[________].

PART 6 — CLINICAL OPERATIONS, COMPLIANCE, AND QUALITY

• ☐ Each Member shall maintain an unrestricted Louisiana medical license, DEA registration, board certification (if applicable), and Medicare/Medicaid enrollment.
• ☐ The Entity shall maintain a HIPAA Privacy and Security program and conduct annual risk analyses.
• ☐ The Entity shall maintain a written compliance program addressing AKS, Stark, the False Claims Act, OIG exclusion screening, and Louisiana Medicaid program integrity rules.
• ☐ Members shall participate in peer review and quality assurance under La. R.S. § 13:3715.3 (peer review confidentiality).

PART 7 — INSURANCE

The Entity and each Member shall be enrolled as a "qualified health care provider" under the Louisiana Medical Malpractice Act, La. R.S. § 40:1231.1 et seq., to obtain the statutory cap and PCF coverage.

PART 8 — RESTRICTIVE COVENANTS (LA. R.S. § 23:921)

Section 8.1 — Non-Competition. During the term of a Member's affiliation and for a period not to exceed two (2) years after separation, the Member agrees not to engage in the practice of medicine in competition with the Entity within the following Louisiana parishes (the "Restricted Parishes"):

• Principal parish of practice: [__________ Parish]
• Contiguous parish 1 (where Entity carries on similar business): [__________ Parish]
• Contiguous parish 2 (where Entity carries on similar business): [__________ Parish]

The Restricted Parishes shall not exceed the parish of the Member's principal practice plus up to two contiguous parishes in which the Entity carries on a similar business, consistent with La. R.S. § 23:921(I).

Section 8.2 — Burn-Off. Pursuant to La. R.S. § 23:921(I), this Section 8 shall expire as to any Member:

• ☐ three (3) years after the effective date of the Member's contract if the Member is a primary care physician; or
• ☐ five (5) years after the effective date of the Member's contract for any other physician.

For contracts in effect on January 1, 2025, the burn-off period began to run on January 1, 2025.

Section 8.3 — Carve-outs. Section 8 does not apply to any Member who is employed by or under contract with (a) a rural hospital as defined in La. R.S. § 40:1189.1, or (b) a federally qualified health center as defined in La. R.S. § 40:1183.3 operating in a rural parish, consistent with La. R.S. § 23:921(I).

Section 8.4 — Non-Solicitation. For two (2) years post-separation, a withdrawing Member shall not solicit Entity employees or contract personnel. Patient solicitation restrictions, if any, must comply with La. R.S. § 23:921 and applicable LSBME continuity-of-care obligations.

Section 8.5 — Confidentiality. Each Member shall protect Entity trade secrets, financial information, and patient records (subject to HIPAA and La. R.S. § 40:1165.1) indefinitely.

PART 9 — WITHDRAWAL, EXPULSION, AND BUYOUT

Section 9.1 — Voluntary Withdrawal. A Member may withdraw on [____] days' written notice.

Section 9.2 — Mandatory Withdrawal. Withdrawal is required upon: (a) loss, suspension, or material restriction of Louisiana medical license; (b) Medicare/Medicaid exclusion; (c) DEA revocation; (d) loss of PCF qualification; (e) felony conviction; (f) death; or (g) permanent disability as defined herein.

Section 9.3 — Buyout. Upon withdrawal, the Entity (or remaining Members) shall purchase the withdrawing Member's interest at a price determined by:

• ☐ Capital account balance plus accrued distributions
• ☐ Formula: [____]× trailing 12-month personal collections net of overhead
• ☐ Independent appraisal under [methodology]

Payment terms: [____]% at closing; balance over [____] months at [____]% interest. Goodwill: ☐ included ☐ excluded.

Section 9.4 — Tail Coverage. The withdrawing Member shall obtain tail (extended reporting) malpractice coverage; cost allocated as: ☐ Member ☐ Entity ☐ split [____]/[____].

PART 10 — DISPUTE RESOLUTION

Disputes shall be resolved by: ☐ mediation ☐ binding arbitration under the Louisiana Arbitration Law (La. R.S. § 9:4201 et seq.) ☐ litigation in [____ Parish] District Court. Louisiana law governs without regard to conflict-of-laws principles.

PART 11 — DISSOLUTION

The Entity dissolves upon: (a) [supermajority] Member vote; (b) reduction to a single Member with no admission within [____] days; (c) loss of all professional licensure; or (d) court order. Upon dissolution, patient records shall be retained or transferred consistent with La. R.S. § 40:1165.1 and LSBME rules.

PART 12 — MISCELLANEOUS

• ☐ Severability — if any provision (especially Section 8) is held invalid, the remainder survives, and the court is requested to reform the offending provision to the maximum extent permitted by La. R.S. § 23:921.
• ☐ Entire Agreement; amendments in writing signed by all Members.
• ☐ Notices by personal delivery, certified mail, or recognized overnight courier to addresses in Schedule A.
• ☐ Counterparts and electronic signatures (La. R.S. § 9:2601 et seq., Louisiana UETA).

SIGNATURES

SCHEDULE A — MEMBERS

SOURCES AND REFERENCES

• La. R.S. § 12:901 et seq. — Professional Medical Corporation Law.
• La. R.S. § 12:1342 — Professional LLCs.
• La. R.S. § 37:1261 et seq. — Louisiana Medical Practice Act.
• La. R.S. § 37:1285(A)(20) — Fee-splitting prohibition.
• La. R.S. § 23:921 (as amended by 2024 La. Acts No. 273, eff. Jan. 1, 2025) — Physician non-compete.
• La. R.S. § 40:1231.1 et seq. — Louisiana Medical Malpractice Act / Patient's Compensation Fund.
• La. Admin. Code tit. 46, Part XLV, § LI-111 — Prohibition of fee splitting (LSBME).
• 42 U.S.C. § 1320a-7b — Federal Anti-Kickback Statute.
• 42 U.S.C. § 1395nn — Stark Law.