MEDICAL PRACTICE PARTNERSHIP AGREEMENT
(New York – Comprehensive Template)
[// GUIDANCE: This template is designed for a traditional general partnership of physicians. If the parties intend to organize as a Professional Limited Liability Company (PLLC) or Professional Corporation (PC), additional entity-specific provisions will be required.]
TABLE OF CONTENTS
- Document Header
- Definitions
- Formation, Purpose & Term
- Capitalization, Profits & Losses
- Governance & Management
- Professional Compliance Obligations
- Representations & Warranties
- Covenants & Restrictions
- Default & Remedies
- Risk Allocation
- Dispute Resolution
- General Provisions
- Execution Block
- Schedule 1 – Capital Contributions
- Schedule 2 – Ownership Percentages
- Schedule 3 – Insurance Requirements
- Schedule 4 – Reserved Matters Requiring Unanimous Consent
1. DOCUMENT HEADER
MEDICAL PRACTICE PARTNERSHIP AGREEMENT
This Medical Practice Partnership Agreement (the “Agreement”) is entered into as of [EFFECTIVE DATE] (the “Effective Date”) by and among:
• [PARTNER NAME #1], M.D., residing at [ADDRESS];
• [PARTNER NAME #2], M.D., residing at [ADDRESS];
• (Add additional Partners as necessary)
(each, a “Partner,” and collectively, the “Partners”).
Recitals
A. Each Partner is duly licensed and currently in good standing to practice medicine in the State of New York.
B. The Partners desire to associate as a partnership under New York law for the purpose of practicing medicine and ancillary activities permissible to New York-licensed physicians.
C. In consideration of the mutual covenants herein, the Partners agree as follows:
2. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings set forth below. Defined terms appear in initial capital letters throughout this Agreement.
“Accounting Period” – Each fiscal year of the Partnership, unless otherwise required under applicable tax law.
“Applicable Law” – All federal, state, and local statutes, regulations, professional rules, and ethical guidelines governing the practice of medicine in New York, including applicable provisions of the New York Education Law, the rules of the New York State Office of the Professions, and Department of Health regulations.
“Capital Account” – With respect to each Partner, the capital account maintained pursuant to Section 4.
“Corporate Practice Restrictions” – Statutory and regulatory prohibitions on the practice of medicine by, or sharing of professional fees with, persons or entities not licensed to practice medicine in New York.
“Event of Default” – Any event described in Section 9.1.
“Fee Splitting Rules” – Applicable New York prohibitions on sharing professional fees with non-licensed persons and limitations on referral-based compensation.
“Malpractice Claim” – Any claim, action, or proceeding alleging professional negligence, malpractice, or violation of Applicable Law in connection with the Partners’ rendering of medical services.
“Malpractice Cap” – The maximum amount of liability per Partner for Malpractice Claims as set forth in Section 10.2.
“Managing Partner” – The Partner elected pursuant to Section 5.2.
“Partnership” – The partnership formed pursuant to this Agreement.
“Practice” – The medical practice conducted by the Partnership.
[// GUIDANCE: Add or delete definitions to match the final drafted provisions.]
3. FORMATION, PURPOSE & TERM
3.1 Formation. The Partners hereby form a general partnership under the New York Partnership Law (the “Partnership Law”) to be known as [LEGAL NAME OF PRACTICE] (or such other name approved by the Partners that complies with all naming restrictions for professional practices).
3.2 Purpose. The Partnership’s exclusive purpose is to practice medicine and any lawful ancillary activities customarily conducted by New York physicians, consistent with Applicable Law, Corporate Practice Restrictions, and Fee Splitting Rules.
3.3 Principal Office. The principal business office shall be at [ADDRESS], or such other location in New York as the Partners may designate.
3.4 Term. The Partnership shall commence on the Effective Date and shall continue until dissolved in accordance with Section 9 or as otherwise required by Applicable Law.
4. CAPITALIZATION, PROFITS & LOSSES
4.1 Initial Capital Contributions. Each Partner shall contribute the cash, property, and/or services set forth beside such Partner’s name on Schedule 1. Contributions are due no later than [DATE].
4.2 Additional Capital Contributions. No Partner shall be obligated to make additional contributions without such Partner’s written consent. Any approved additional contribution will be credited to the contributing Partner’s Capital Account.
4.3 Profits and Losses. Profits and losses of the Partnership shall be allocated among the Partners pro rata in proportion to their respective Ownership Percentages as set forth on Schedule 2, unless unanimously agreed otherwise.
4.4 Distributions. Subject to reasonable reserves for working capital, taxes, insurance, and anticipated liabilities, cash available for distribution shall be distributed [QUARTERLY / MONTHLY] in accordance with Section 4.3.
4.5 Tax Matters. The Partners intend for the Partnership to be treated as a partnership for federal and state income tax purposes. The Managing Partner is hereby designated the “Partnership Representative” for IRS purposes.
5. GOVERNANCE & MANAGEMENT
5.1 Voting. Except as otherwise expressly provided, all Partnership matters shall be decided by Majority Vote (more than 50% of Ownership Percentages). Schedule 4 lists matters requiring unanimous consent.
5.2 Managing Partner. The Partners shall elect a Managing Partner for a [ONE-YEAR] term, renewable by Majority Vote. The Managing Partner shall:
a. Oversee daily operations and staffing;
b. Implement policies adopted by the Partners;
c. Sign checks and contracts up to [$AMOUNT] without additional approval; and
d. Provide monthly financial reports.
5.3 Professional Committees. The Partners may establish Medical Review, Compliance, or Quality Assurance Committees as required by Applicable Law or accreditation standards.
5.4 Partner Meetings. Regular meetings shall be held at least [FREQUENCY]. Special meetings may be called upon at least [10] days’ written notice.
6. PROFESSIONAL COMPLIANCE OBLIGATIONS
6.1 Licensing. Each Partner shall maintain an active, unrestricted license to practice medicine in New York and complete all continuing education required by Applicable Law.
6.2 Corporate Practice & Fee Splitting. No Partner shall permit the Partnership to violate Corporate Practice Restrictions or Fee Splitting Rules, including (without limitation) by:
a. Allowing non-physicians any ownership interest;
b. Sharing professional fees with unlicensed persons, except for permitted employee compensation plans; or
c. Entering into referral arrangements prohibited by law.
6.3 Credentialing & Privileges. Partners shall cooperate in maintaining hospital privileges, payer credentialing, and certifications necessary for the Practice.
6.4 Medical Records & Privacy. The Partnership shall adopt policies compliant with HIPAA and New York confidentiality laws, including secure retention of records for the minimum statutory period.
6.5 Billing & Coding Compliance. The Partnership shall implement written billing compliance programs consistent with OIG guidelines and state Medicaid requirements.
7. REPRESENTATIONS & WARRANTIES
7.1 By Each Partner. Each Partner represents and warrants that, as of the Effective Date and continuing thereafter:
a. The Partner holds an unrestricted New York medical license;
b. The Partner is not currently subject to any disciplinary order that would materially impair the Partner’s ability to practice;
c. The Partner is not party to any agreement limiting the Partner’s ability to enter into this Agreement; and
d. All information provided to the Partnership is true, complete, and accurate.
7.2 Survival. The representations and warranties shall survive the execution of this Agreement and the admission of any additional Partner for a period of [24] months after the making of each statement.
8. COVENANTS & RESTRICTIONS
8.1 Affirmative Covenants. Each Partner shall:
a. Devote such professional time as reasonably necessary for the Partnership;
b. Comply with all Partnership policies and Applicable Law;
c. Maintain malpractice insurance as set forth in Schedule 3;
d. Promptly notify the Partnership of any threatened or actual disciplinary action.
8.2 Negative Covenants. Without the prior written consent of the Partnership:
a. No Partner shall engage in conduct that risks violation of Corporate Practice Restrictions;
b. No Partner shall use Partnership assets for personal benefit;
c. No Partner shall disclose confidential Partnership information except as required by law.
8.3 Restrictive Covenants Upon Withdrawal or Expulsion.
a. Non-Solicitation. For [24] months following the Partner’s withdrawal or expulsion, the Partner shall not solicit employees or patients of the Practice.
b. Non-Competition. (Optional/subject to enforceability under New York law) [// GUIDANCE: Carefully evaluate reasonableness in scope, geography, and duration; New York disfavors physician non-competes unless narrowly tailored to protect legitimate business interests.]
9. DEFAULT & REMEDIES
9.1 Events of Default. Each of the following constitutes an Event of Default with respect to a Partner:
a. Loss, suspension, or restriction of medical license;
b. Conviction of a felony or crime of moral turpitude;
c. Material breach of this Agreement not cured within [30] days after written notice;
d. Failure to maintain required insurance;
e. Bankruptcy or insolvency events.
9.2 Remedies. Upon an Event of Default, the non-defaulting Partners may, by Majority Vote (excluding the defaulting Partner):
a. Suspend the defaulting Partner’s management rights;
b. Require the defaulting Partner to sell his/her Partnership interest per Section 9.3;
c. Seek injunctive relief; and
d. Pursue damages, costs, and attorneys’ fees.
9.3 Mandatory Buy-Out. The purchase price for a defaulting Partner’s interest shall be the lesser of Fair Market Value or [X] times the Partner’s trailing twelve-month distributions, payable [50%] at closing and [50%] over [12] months with interest at [Prime + 2%].
10. RISK ALLOCATION
10.1 Indemnification for Malpractice.
a. Each Partner (“Indemnifying Partner”) shall indemnify and hold harmless the other Partners and the Partnership from any Malpractice Claim arising out of the Indemnifying Partner’s negligent or wrongful acts or omissions.
b. The Partnership shall advance reasonable defense costs subject to prompt reimbursement by the Indemnifying Partner.
10.2 Limitation of Liability (Malpractice Cap). Except for willful misconduct or gross negligence, the liability of each Partner to the Partnership for Malpractice Claims shall not exceed the lesser of:
i. The limits of the Partner’s malpractice insurance policy; or
ii. [$AMOUNT] per occurrence and [$AMOUNT] in the aggregate per Accounting Period (“Malpractice Cap”).
10.3 Insurance Requirements. Each Partner shall maintain individual professional liability insurance with limits of no less than [$1,000,000/$3,000,000] per occurrence/aggregate, tail coverage upon termination, and such additional coverage as set forth on Schedule 3.
10.4 Force Majeure. No Partner shall be liable for delays or failure in performance (other than payment obligations) due to causes beyond reasonable control, including natural disasters, government orders, or epidemics, provided the Partner gives prompt notice and resumes performance as soon as practicable.
11. DISPUTE RESOLUTION
11.1 Governing Law. This Agreement and any dispute arising hereunder shall be governed by the substantive laws of the State of New York, without regard to conflict-of-laws principles.
11.2 Forum Selection for Injunctive Relief. Any action seeking temporary, preliminary, or permanent injunctive relief shall be brought exclusively in the state courts located in [COUNTY], New York. Each Partner irrevocably submits to such jurisdiction.
11.3 Arbitration. All other disputes shall be resolved by final and binding arbitration administered by [AAA / JAMS] in accordance with its Healthcare Rules then in effect.
a. Seat of Arbitration: [CITY, NY]
b. Number of Arbitrators: [1/3]; arbitrators shall be attorneys with at least ten years of healthcare experience.
c. Discovery: Limited to reasonable document requests and [X] depositions per side.
d. Award: The arbitrator(s) may grant any remedy permitted by this Agreement and Applicable Law. Judgment may be entered in any court of competent jurisdiction.
11.4 Optional Jury Trial Waiver. [OPTIONAL – INSERT IF DESIRED] EACH PARTNER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY TO THE EXTENT PERMITTED BY APPLICABLE LAW.
12. GENERAL PROVISIONS
12.1 Amendments & Waivers. Any amendment must be in writing and signed by all Partners. No waiver shall be effective unless in writing and signed by the waiving Partner.
12.2 Assignment. No Partner may assign, pledge, or otherwise transfer any interest in the Partnership except as expressly permitted herein. Any prohibited transfer is void.
12.3 Successors & Assigns. This Agreement binds and inures to the benefit of the Partners and their permitted successors and assigns.
12.4 Severability. If any provision is held invalid, the remaining provisions shall remain in full force, and the Partners shall negotiate a lawful substitute provision that most closely reflects the original intent.
12.5 Integration. This Agreement, including all Schedules, constitutes the entire agreement of the Partners with respect to the subject matter and supersedes all prior agreements, written or oral.
12.6 Counterparts; Electronic Signatures. This Agreement may be executed in multiple counterparts, each deemed an original, and may be signed electronically pursuant to the New York Electronic Signatures and Records Act.
12.7 Notices. All notices shall be in writing and deemed given when delivered personally, sent by certified mail (return receipt requested), or by nationally recognized overnight courier, to the addresses on record with the Partnership.
13. EXECUTION BLOCK
IN WITNESS WHEREOF, the Partners have executed this Medical Practice Partnership Agreement as of the Effective Date.
| Partner | Signature | Date |
|---|---|---|
| [PARTNER NAME #1] | _______ | _____ |
| [PARTNER NAME #2] | _______ | _____ |
| (Add rows as needed) |
[// GUIDANCE: Notarization is not mandatory for partnership agreements under New York law but may be used for evidentiary purposes.]
14. SCHEDULE 1 – CAPITAL CONTRIBUTIONS
| Partner | Cash | Property (describe) | Services (FMV) | Total Value |
|---|---|---|---|---|
| [NAME] | $ | $ | $ | |
15. SCHEDULE 2 – OWNERSHIP PERCENTAGES
| Partner | Ownership % |
|---|---|
| [NAME] | [ ]% |
16. SCHEDULE 3 – INSURANCE REQUIREMENTS
Minimum professional liability limits per Partner: [$1,000,000/$3,000,000]
Tail coverage required: [Yes/No]
Additional coverage: Cyber Liability [$AMOUNT], Employment Practices [$AMOUNT], General Liability [$AMOUNT].
17. SCHEDULE 4 – RESERVED MATTERS REQUIRING UNANIMOUS CONSENT
- Admission of a new Partner.
- Amendment of this Agreement.
- Merger, consolidation, or sale of substantially all Practice assets.
- Incurrence of debt in excess of [$AMOUNT].
- Adoption of an employee equity or profit-sharing plan.
- Dissolution of the Partnership.
[// GUIDANCE: Review all bracketed placeholders, confirm compliance with current New York statutes and regulations, and tailor insurance, financial, and restrictive-covenant terms to the specific Practice. This template is intended for attorney customization prior to use.]