Minnesota Medical Practice Partnership Agreement

DISCLAIMER (MANDATORY — DO NOT DELETE)
This document is a model template for educational purposes only and does not constitute legal, tax, or business advice. Minnesota law restricts the form of medical practice entities (Minn. Stat. ch. 319B), regulates fee-splitting (Minn. Stat. § 147.091), and as of July 1, 2023, BANS most employment non-compete agreements (Minn. Stat. § 181.988). A qualified Minnesota-licensed attorney must review and customize this agreement before execution.

MINNESOTA MEDICAL PRACTICE PARTNERSHIP AGREEMENT

Effective Date: [__/__/____]
Practice Name: [LEGAL NAME OF PROFESSIONAL FIRM] ("Practice")
Entity Type: ☐ Professional Association (PA) ☐ Professional Limited Liability Partnership (P.L.L.P.) ☐ Professional Limited Liability Company (P.L.L.C.) (Minn. Stat. ch. 319B)
Principal Office: [STREET, CITY, MN, ZIP]

I. PARTIES

II. RECITALS

A. The Partners are physicians duly licensed to practice medicine in the State of Minnesota under Minn. Stat. ch. 147.

B. The Partners desire to associate as a Minnesota professional firm under Minn. Stat. ch. 319B for the purpose of rendering medical services.

C. Corporate Practice of Medicine. The Partners acknowledge Minnesota's corporate practice of medicine doctrine (Granger v. Adson, 190 Minn. 23, 250 N.W. 722 (1933)), which generally prohibits unlicensed persons or entities from owning or controlling a medical practice. The Practice is organized as a Professional Firm under Minn. Stat. ch. 319B as the statutorily authorized vehicle for licensed physicians to practice medicine through a business entity in Minnesota.

D. The Partners enter this Agreement to set forth their rights, duties, capital contributions, profit allocations, governance, and exit terms.

III. PURPOSE AND SCOPE

The Practice is formed solely to render medical services lawfully practiced by its Partners under Minn. Stat. ch. 147 and to engage in activities incident to that practice. The Practice shall not engage in any activity prohibited to a Professional Firm under Minn. Stat. ch. 319B.

IV. CAPITAL CONTRIBUTIONS

Additional capital contributions require unanimous written consent of the Partners.

V. OWNERSHIP INTERESTS

VI. PROFIT AND LOSS ALLOCATION; COMPENSATION

☐ Pro rata based on ownership percentages
☐ Productivity-based (e.g., wRVU, collections, or net revenue attributable to each Partner)
☐ Hybrid — base salary plus productivity bonus

Allocation Formula: [____________________________]

VII. GOVERNANCE

A. Management Committee. The Practice shall be governed by a Management Committee consisting of all Partners (or [__] elected Partners). Each member has one vote.

B. Voting Thresholds.

C. Officers. The Partners may elect a Managing Partner, Treasurer, and other officers as needed.

VIII. CLINICAL AND PROFESSIONAL STANDARDS

Each Partner shall:

☐ Maintain an active, unrestricted Minnesota medical license
☐ Maintain board certification (where applicable) in [SPECIALTY]
☐ Comply with Minn. Stat. ch. 147 and Minnesota Board of Medical Practice rules
☐ Maintain professional liability insurance in amounts of at least $[____] per claim and $[____] aggregate
☐ Comply with HIPAA (45 C.F.R. parts 160, 164) and the Minnesota Health Records Act (Minn. Stat. §§ 144.291–144.298)
☐ Comply with the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b) and Stark Law (42 U.S.C. § 1395nn)

IX. FEE-SPLITTING PROHIBITION

Consistent with Minn. Stat. § 147.091, subd. 1(p), the Practice shall not engage in improper fee-splitting with any unlicensed person or entity. All compensation arrangements with non-physician personnel shall be structured as bona fide salary, wages, or fair-market-value service compensation, not as a percentage of professional fees in violation of applicable law.

X. RESTRICTIVE COVENANTS

A. Non-Compete — STATUTORILY BANNED. The Partners acknowledge that, effective July 1, 2023, Minn. Stat. § 181.988 voids most post-employment non-compete agreements entered into between an employer and an employee or independent contractor in Minnesota. Accordingly, this Agreement does not impose a post-departure geographic or temporal practice restriction on any Partner, except as expressly permitted by statute.

B. Statutory Exceptions. Minn. Stat. § 181.988, subd. 2 preserves limited exceptions for:

1. Non-competes agreed upon during the sale of a business (or a partner's ownership interest, in connection with the sale); and
2. Non-competes agreed upon in anticipation of the dissolution of a business.

If a separate sale or dissolution-related restrictive covenant is later executed under one of these exceptions, it shall be set forth in a stand-alone written agreement that recites the applicable exception.

C. Confidentiality. Each Partner shall maintain the confidentiality of Practice trade secrets, financial information, patient lists (subject to HIPAA), and proprietary clinical protocols, both during and after departure. Confidentiality obligations are NOT non-competes and remain enforceable.

D. Non-Solicitation of Employees. Each Partner agrees, for [__] months following departure, not to actively solicit Practice employees to leave their employment. (Verify enforceability under current Minnesota common law and Minn. Stat. § 181.9881.)

E. Patient Choice. Nothing in this Agreement shall restrict a patient's right to choose his or her physician, nor shall it impair a departing Partner's compliance with continuity-of-care obligations under Minn. Stat. § 144.651.

XI. WITHDRAWAL, RETIREMENT, AND EXPULSION

A. Voluntary Withdrawal. A Partner may withdraw upon [__] days' written notice.

B. Mandatory Withdrawal Events.

☐ Loss, suspension, or material restriction of Minnesota medical license
☐ Loss of board certification required for the Partner's role
☐ Exclusion from Medicare, Medicaid, or other federal healthcare program
☐ Conviction of a felony or crime involving moral turpitude
☐ Death or permanent disability (as defined herein)

C. Expulsion for Cause. A Partner may be expelled by [Supermajority] vote for: material breach of this Agreement; gross professional misconduct; or actions materially harmful to the Practice.

XII. BUYOUT AND VALUATION

A. Buyout Price. The buyout price for a withdrawing Partner's interest shall equal:

☐ Book value as of the withdrawal date
☐ Appraised fair market value (independent appraiser)
☐ Formula: [____________________________]

B. Goodwill. ☐ Personal goodwill of the departing Partner is excluded. ☐ Enterprise goodwill is included at $[____] or formula.

C. Payment Terms. Payment shall be made over [__] months in equal installments with interest at [__]% per annum.

XIII. INSURANCE

A. Professional Liability. Each Partner shall maintain a tail (extended reporting endorsement) policy or equivalent upon departure if the Practice's coverage is claims-made. Cost allocation: ☐ Departing Partner ☐ Practice ☐ Shared.

B. Practice Coverage. The Practice shall maintain general liability, cyber liability, employment practices, and property insurance.

XIV. RECORDS AND HIPAA

Patient records are property of the Practice and shall be retained per Minn. Stat. § 145.32 and applicable federal law. Any departing Partner's access to patient records post-departure shall comply with HIPAA and the Minnesota Health Records Act. Patient notification of provider departure shall comply with Minnesota Board of Medical Practice guidance.

XV. DISPUTE RESOLUTION

A. Negotiation. Partners shall first attempt to resolve disputes through good-faith negotiation.

B. Mediation. If unresolved within [30] days, disputes shall be submitted to mediation in [COUNTY], Minnesota.

C. Arbitration. Unresolved disputes shall be arbitrated under the rules of the American Arbitration Association in [COUNTY], Minnesota, applying Minnesota law. Judgment on the award may be entered in any Minnesota court of competent jurisdiction.

XVI. GOVERNING LAW; VENUE

This Agreement is governed by Minnesota law without regard to conflict-of-laws principles. Venue for any judicial action lies exclusively in [____ County] District Court, State of Minnesota.

XVII. MISCELLANEOUS

A. Entire Agreement. This Agreement, together with the Practice's organizational documents filed under Minn. Stat. ch. 319B, constitutes the entire agreement among the Partners.

B. Amendments. Amendments require unanimous written consent of all Partners.

C. Severability. If any provision is held unenforceable, the remainder shall remain in full force.

D. Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, including electronic signatures under Minn. Stat. ch. 325L (UETA).

XVIII. SIGNATURES

SOURCES AND REFERENCES

• Minn. Stat. ch. 319B — Minnesota Professional Firms Act
• Minn. Stat. ch. 147 — Minnesota Medical Practice Act; § 147.091 (disciplinary grounds, fee-splitting)
• Minn. Stat. § 181.988 — Statutory ban on employment non-compete agreements (eff. July 1, 2023)
• Minn. Stat. § 181.9881 — Restrictive covenants in service contracts
• Minn. Stat. ch. 322C — Minnesota Revised Uniform Limited Liability Company Act
• Minn. Stat. ch. 323A — Uniform Partnership Act
• Granger v. Adson, 190 Minn. 23, 250 N.W. 722 (1933) — corporate practice of medicine doctrine
• 42 U.S.C. § 1320a-7b — federal Anti-Kickback Statute
• 42 U.S.C. § 1395nn — federal Stark Law
• 45 C.F.R. parts 160, 164 — HIPAA
• Minn. Stat. §§ 144.291–144.298 — Minnesota Health Records Act