Medical Practice Partnership Agreement

MEDICAL PRACTICE PARTNERSHIP AGREEMENT

(North Dakota — Physician Practice Template)

TABLE OF CONTENTS

1. Document Header and Recitals
2. Definitions
3. Formation, Name, Purpose, and Term
4. Capital Contributions and Capital Accounts
5. Allocation of Profits, Losses, and Distributions
6. Management, Voting, and Officers
7. Licensure, Credentialing, and Regulatory Compliance
8. Compensation Methodology and Fee-Splitting Safeguards
9. Books, Records, and Accounting
10. Partner Duties; Outside Activities; Restrictive Covenants
11. Admission, Withdrawal, Retirement, and Buy-Sell
12. Malpractice Insurance, Indemnification, and Risk Allocation
13. Dispute Resolution
14. General Provisions
15. Execution Block

1. DOCUMENT HEADER AND RECITALS

This MEDICAL PRACTICE PARTNERSHIP AGREEMENT (this "Agreement") is made and entered into as of [__/__/____] (the "Effective Date") by and among the persons listed below, each of whom is a physician duly licensed under NDCC ch. 43-17 to practice medicine in the State of North Dakota (each a "Partner"; collectively, the "Partners").

RECITALS

A. Each Partner is duly licensed under NDCC ch. 43-17 and in good standing with the North Dakota Board of Medicine.
B. The Partners desire to associate for the practice of medicine and to govern their relationship through this Agreement, in compliance with applicable North Dakota and federal law.
C. The Partners intend that the Practice operate consistent with NDCC ch. 10-31 (Professional Corporations) or NDCC ch. 10-32.1 (Uniform LLC Act), as elected herein, and with all rules of the North Dakota Board of Medicine.

NOW, THEREFORE, in consideration of the mutual covenants herein and other good and valuable consideration, the Partners agree as follows.

2. DEFINITIONS

"Affiliate" — any entity that controls, is controlled by, or is under common control with a Partner.

"Capital Account" — the account maintained for each Partner reflecting contributions, allocations, and distributions.

"Code" — the Internal Revenue Code of 1986, as amended.

"Designated Officer / Managing Partner" — the Partner designated under § 6 to perform day-to-day management functions.

"Practice" — the medical practice operated under the name set forth in § 3.

"Stark Law" and "AKS" — 42 U.S.C. § 1395nn and 42 U.S.C. § 1320a-7b respectively, and their implementing regulations.

3. FORMATION, NAME, PURPOSE, AND TERM

A. Form of Entity. The Partners elect to operate the Practice as a (choose one):
☐ General partnership of licensed physicians
☐ Professional Corporation under NDCC ch. 10-31
☐ Professional Limited Liability Company under NDCC ch. 10-32.1

B. Name. The Practice shall be known as "[PRACTICE NAME]" or such other name as the Partners shall designate.

C. Principal Office. [STREET ADDRESS], [CITY], North Dakota [ZIP].

D. Purpose. The exclusive purpose of the Practice is the lawful practice of medicine and ancillary activities permitted to licensed physicians under NDCC ch. 43-17 and the rules of the North Dakota Board of Medicine.

E. Term. The Practice shall commence on the Effective Date and continue until dissolved in accordance with this Agreement.

4. CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS

A. Initial Contributions.

B. Additional Contributions. No Partner shall be required to make additional capital contributions except upon unanimous written consent of all Partners.

C. No Interest. No Partner is entitled to interest on Capital Account balances.

5. ALLOCATION OF PROFITS, LOSSES, AND DISTRIBUTIONS

A. Allocations. Profits and losses shall be allocated among the Partners pro rata in proportion to Percentage Interests, except as adjusted by any compensation methodology adopted under § 8.

B. Distributions. Cash distributions shall be made at such times and in such amounts as the Partners determine, subject to maintenance of adequate reserves for operating expenses, malpractice insurance, taxes, and debt service.

C. Tax Distributions. The Practice shall make estimated tax distributions sufficient to enable each Partner to pay federal and state income taxes attributable to allocated income.

6. MANAGEMENT, VOTING, AND OFFICERS

A. Management Structure. The Practice shall be managed by all Partners acting jointly, with day-to-day operations delegated to a Managing Partner designated by majority vote.

B. Voting. Except as otherwise required by law or this Agreement, all decisions require a majority of Percentage Interests. The following actions require unanimous written consent:
☐ Admission of a new Partner
☐ Sale or merger of the Practice
☐ Incurrence of debt exceeding $[____]
☐ Amendment of this Agreement
☐ Dissolution of the Practice

C. Meetings. Regular meetings shall be held [MONTHLY / QUARTERLY]; special meetings may be called by any Partner on [____] days' written notice.

D. Books and Records Access. Each Partner shall have full access to the books, records, and patient-level financial data of the Practice, subject to HIPAA and other applicable confidentiality obligations.

7. LICENSURE, CREDENTIALING, AND REGULATORY COMPLIANCE

A. Continuous Licensure. Each Partner shall at all times maintain (i) an active, unrestricted North Dakota medical license under NDCC ch. 43-17; (ii) DEA registration appropriate to practice; (iii) board certification, if applicable; and (iv) all required CME.

B. Mandatory Reporting. Each Partner shall promptly disclose to the other Partners any disciplinary action, malpractice claim, investigation, or restriction affecting licensure or hospital privileges.

C. Corporate Practice of Medicine. The Partners acknowledge that, although North Dakota recognizes corporate-practice-of-medicine principles, ND law expressly permits the practice of medicine through professional entities formed under NDCC ch. 10-31 or NDCC ch. 10-32.1. Non-physicians shall not own equity in the Practice or exercise clinical control.

D. Federal Fraud and Abuse Compliance. The Practice and the Partners shall comply with the AKS, the Stark Law, the False Claims Act (31 U.S.C. §§ 3729 et seq.), HIPAA/HITECH, and all CMS and OIG guidance.

8. COMPENSATION METHODOLOGY AND FEE-SPLITTING SAFEGUARDS

A. Compensation Plan. Partner compensation shall be determined under the methodology attached as Exhibit A (e.g., base + productivity, equal-share, or work-RVU based), reviewed annually.

B. No Unlawful Fee-Splitting. No Partner shall pay or receive any remuneration in exchange for the referral of patients, in violation of NDCC § 43-17-31 (grounds for disciplinary action; verify current subsection covering fee-splitting / unprofessional conduct), the AKS, or the Stark Law. Internal distributions of practice profits among bona-fide Partners are permitted to the extent consistent with the in-office ancillary services exception and other applicable safe harbors.

C. Designated Health Services. Compensation tied to volume or value of referrals for "designated health services" shall be structured to satisfy a Stark Law exception, with documentation maintained in the Practice records.

9. BOOKS, RECORDS, AND ACCOUNTING

A. Fiscal Year. The fiscal year shall be the calendar year unless otherwise required by the Code.
B. Accounting Method. Books shall be maintained on the [CASH / ACCRUAL] basis.
C. Annual Audit/Review. Financial statements shall be [AUDITED / REVIEWED / COMPILED] annually by an independent CPA.
D. Tax Matters Partner / Partnership Representative. [PARTNER NAME] is designated under Code § 6223.

10. PARTNER DUTIES; OUTSIDE ACTIVITIES; RESTRICTIVE COVENANTS

A. Time Commitment. Each Partner shall devote substantially full professional time and best efforts to the Practice, except as otherwise approved by the Partners.

B. Outside Activities. Outside professional activities, locum tenens engagements, expert-witness work, and academic appointments must be disclosed in advance and shall not materially interfere with Practice duties.

C. North Dakota Statutory Ban on Non-Competes — IMPORTANT. The Partners acknowledge that under NDCC § 9-08-06, "[e]very contract by which anyone is restrained from exercising a lawful profession, trade, or business of any kind, otherwise than as provided by sections 9-08-06.1 and 9-08-06.2, is to that extent void." Physician non-competition covenants are therefore generally VOID in North Dakota. Accordingly:

1. No Partner is or shall be bound by any covenant prohibiting the practice of medicine within any geographic area or time period following separation from the Practice, except as expressly permitted by NDCC § 9-08-06.1 (sale of the goodwill of a business — limited to specified county, city, or part thereof) or NDCC § 9-08-06.2 (partnership dissolution — limited to the same city where the partnership business was transacted).
2. Any restrictive covenant contained in this Agreement that exceeds the scope permitted by §§ 9-08-06.1 and 9-08-06.2 is void to that extent under § 9-08-06; the remainder of this Agreement shall continue in force.

D. Permitted Statutory Restrictions (Limited).
☐ Sale-of-Goodwill Restriction (§ 9-08-06.1). Upon a Partner's sale of his or her ownership interest representing goodwill, that selling Partner agrees not to practice medicine in [SPECIFIED COUNTY/CITY/PART] for so long as the buyer or successor carries on the like business therein, to the maximum extent permitted by § 9-08-06.1.
☐ Dissolution Restriction (§ 9-08-06.2). Upon dissolution of the partnership, a withdrawing Partner agrees not to carry on a similar medical practice within the same city in which the partnership business has been transacted, to the maximum extent permitted by § 9-08-06.2.

E. Permissible Protective Covenants. Nothing in NDCC § 9-08-06 prohibits the following, which the Partners agree to observe:

• Confidentiality / non-disclosure obligations as to Practice trade secrets and PHI;
• Non-solicitation of Practice employees (subject to any future statutory limits);
• Patient-record continuity and notice procedures upon Partner departure;
• Return of Practice property and access credentials.

F. No Liquidated Damages for Competing. No liquidated-damages, forfeiture, or "buyout-or-compete" provision shall be construed to penalize a departing Partner for continuing to practice medicine; any such provision is void to that extent under NDCC § 9-08-06.

11. ADMISSION, WITHDRAWAL, RETIREMENT, AND BUY-SELL

A. Admission of New Partner. Requires unanimous written consent, execution of a joinder, and capital contribution as the Partners determine.

B. Voluntary Withdrawal. A Partner may withdraw on [____] days' prior written notice; the withdrawing Partner shall be paid the value of his or her interest under the valuation method in § 11(E).

C. Involuntary Withdrawal. A Partner may be involuntarily withdrawn upon: loss of licensure; exclusion from federal health-care programs; conviction of a felony or crime of moral turpitude; sustained disability beyond [____] months; or material breach.

D. Death; Disability. Upon death or sustained disability, the affected Partner's interest shall be purchased by the Practice or remaining Partners on the terms set forth in this § 11.

E. Valuation. Fair value shall be determined by [AGREED FORMULA / INDEPENDENT APPRAISAL], excluding any value attributable to anticipated patient referrals.

F. Payment Terms. Payment in [____] equal installments over [____] months, with interest at [____]%.

12. MALPRACTICE INSURANCE, INDEMNIFICATION, AND RISK ALLOCATION

A. Required Coverage. Each Partner shall maintain professional liability insurance with limits not less than $[____] per occurrence / $[____] aggregate.

B. Tail Coverage. Upon withdrawal, the withdrawing Partner (or the Practice on his or her behalf) shall procure extended reporting period ("tail") coverage at [DEFAULT ALLOCATION].

C. Indemnification. Each Partner shall indemnify the Practice and other Partners for any liability arising from that Partner's own malpractice, intentional misconduct, or violation of law, to the maximum extent permitted by North Dakota law.

D. No Indemnity for Criminal / Fraudulent Acts. No indemnification is available for acts constituting fraud, willful misconduct, or violations of the AKS, Stark Law, or False Claims Act.

13. DISPUTE RESOLUTION

A. Negotiation. The Partners shall first attempt good-faith negotiation for [____] days.
B. Mediation. Unresolved disputes shall be submitted to non-binding mediation in [CITY], North Dakota.
C. Arbitration. If mediation fails, disputes shall be resolved by binding arbitration administered by [AAA / JAMS] under its commercial rules, seated in North Dakota.
D. Equitable Relief. Notwithstanding the foregoing, any Partner may seek injunctive relief in a court of competent jurisdiction in North Dakota to protect confidential information or to enforce statutorily permitted restrictions under §§ 9-08-06.1 and 9-08-06.2.

14. GENERAL PROVISIONS

A. Governing Law. This Agreement is governed by the laws of the State of North Dakota, without regard to conflicts principles.
B. Venue. Any judicial proceeding shall be brought exclusively in the District Court for [______] County, North Dakota.
C. Severability. If any provision is held invalid or unenforceable (including under NDCC § 9-08-06), the remaining provisions shall remain in full force, and the offending provision shall be reformed to the maximum extent permitted by law.
D. Entire Agreement. This Agreement, together with all exhibits, constitutes the entire agreement of the Partners and supersedes all prior agreements.
E. Amendment. Amendments require unanimous written consent.
F. Counterparts; Electronic Signatures. This Agreement may be executed in counterparts and by electronic signature under NDCC ch. 9-16.

15. EXECUTION

SOURCES AND REFERENCES

• NDCC ch. 43-17 — North Dakota Medical Practice Act.
• NDCC ch. 10-31 — Professional Corporations Act.
• NDCC ch. 10-32.1 — North Dakota Uniform Limited Liability Company Act (applicable to professional services).
• NDCC § 9-08-06 — Statutory ban on covenants in restraint of profession, trade, or business.
• NDCC § 9-08-06.1 — Sale-of-business goodwill exception.
• NDCC § 9-08-06.2 — Partnership-dissolution exception.
• NDCC § 43-17-31 — Grounds for disciplinary action (verify current subsection re: fee-splitting / unprofessional conduct).
• 42 U.S.C. § 1320a-7b — Federal Anti-Kickback Statute.
• 42 U.S.C. § 1395nn — Stark Law.
• 45 C.F.R. Parts 160, 164 — HIPAA / HITECH.