Medical Practice Partnership Agreement

DISCLAIMER (MANDATORY — DO NOT DELETE)
This model template is for educational purposes only and does not constitute legal, tax, or accounting advice. Rhode Island's corporate practice of medicine doctrine, physician restrictive-covenant ban (R.I. Gen. Laws § 5-37-33), fee-splitting prohibitions, and federal fraud-and-abuse laws (Anti-Kickback Statute, Stark Law) are complex and frequently updated. Qualified Rhode Island health-law counsel must review and customize this Agreement before execution.

MEDICAL PRACTICE PARTNERSHIP AGREEMENT

(Rhode Island — Physician Practice Entity)

Effective Date: [DATE]
Practice Entity: [LEGAL NAME, P.C. / PLLC] ("Practice")
Entity Form: ☐ Professional Service Corporation (R.I. Gen. Laws § 7-5.1-1 et seq.) ☐ Professional LLC (R.I. Gen. Laws § 7-16-67) ☐ General Partnership (R.I. Gen. Laws § 7-12.1-1 et seq.)
Principal Office: [STREET ADDRESS, RI]
Founding Physicians ("Partners"): [NAMES, RI LICENSE NOS.]

TABLE OF CONTENTS

I. Formation & Purpose
II. Definitions
III. Capital Contributions & Ownership
IV. Management & Governance
V. Compensation & Distributions
VI. Clinical & Regulatory Compliance
VII. Transfer Restrictions & Buy-Sell
VIII. Withdrawal, Death & Disability
IX. Restrictive Covenants (RI-Specific)
X. Dispute Resolution
XI. General Provisions
XII. Execution Block

I. FORMATION & PURPOSE

1.1 Formation. The Partners hereby form/continue the Practice under the laws of the State of Rhode Island for the purpose of providing professional medical services through duly licensed physicians.

1.2 Purpose. The exclusive purpose is the practice of medicine as authorized under R.I. Gen. Laws § 5-37-1 et seq. and ancillary lawful activities.

1.3 Ownership Eligibility. Only individuals duly licensed to practice medicine in Rhode Island (and other permitted professionals if forming a multi-disciplinary entity under § 7-5.1-3) may hold equity in the Practice. Lay ownership is prohibited under Rhode Island's corporate practice of medicine doctrine and § 7-5.1-1 et seq.

1.4 Term. The Practice shall continue until dissolved under Section VIII or Article XI.

II. DEFINITIONS

"Agreement" — This Medical Practice Partnership Agreement, as amended.

"Disability" — Inability to perform the essential functions of a practicing physician for [120] consecutive days or [180] days in any [12]-month period, as determined under Section 8.3.

"Equity Interest" — A Partner's ownership stake in the Practice, whether denominated as shares, membership interests, or partnership interests.

"Good Standing" — A Partner who (i) holds an active, unrestricted RI medical license; (ii) maintains required DEA registration and board certifications; (iii) has not been excluded from federal healthcare programs; and (iv) is current on capital and other obligations to the Practice.

"Practice Sale Transaction" — A bona fide sale of all or substantially all of the Practice's assets or equity to a third party, qualifying for the practice-sale exception under R.I. Gen. Laws § 5-37-33(b).

"Restrictive Covenant" — Any contractual term restricting a physician's right to practice medicine in any geographic area, for any period, or restricting the right to treat, advise, consult with, or solicit current patients.

III. CAPITAL CONTRIBUTIONS & OWNERSHIP

3.1 Initial Contributions.

3.2 Additional Contributions. The Practice may require additional contributions upon affirmative vote of [TWO-THIRDS] of the Partners.

3.3 Capital Accounts. The Practice shall maintain a capital account for each Partner in accordance with Treas. Reg. § 1.704-1(b)(2)(iv).

IV. MANAGEMENT & GOVERNANCE

4.1 Managing Partner / Officer. The Partners shall elect a Managing Partner (or, if a P.C., a President) to handle day-to-day operations.

4.2 Voting. Except as otherwise provided, each Partner has one vote. The following matters require unanimous consent:
a. Admission of new Partners;
b. Sale or merger of the Practice (Practice Sale Transaction);
c. Amendment of this Agreement;
d. Incurring debt exceeding $[AMOUNT];
e. Dissolution.

4.3 Meetings. Regular meetings shall occur not less than quarterly. Notice and procedure shall conform to R.I. Gen. Laws § 7-5.1 (for P.C.) or § 7-16 (for LLC), as applicable.

4.4 Clinical Independence. All clinical decisions shall be made by licensed physicians exercising independent professional judgment. No non-physician shall direct or interfere with the practice of medicine.

V. COMPENSATION & DISTRIBUTIONS

5.1 Compensation Formula. Each Partner shall be compensated under [PRODUCTIVITY / EQUAL-SHARE / HYBRID] formula attached as Schedule A.

5.2 Distributions. Net profits shall be distributed pro rata in proportion to Equity Interest, except as otherwise determined by unanimous vote.

5.3 No Fee Splitting. No Partner or the Practice shall engage in any arrangement violating R.I. Gen. Laws § 5-37-21 (fee splitting for referrals to clinical laboratories) or any federal fraud-and-abuse law.

VI. CLINICAL & REGULATORY COMPLIANCE

6.1 Licensure. Each Partner must maintain at all times: (i) active RI medical license under R.I. Gen. Laws § 5-37-1 et seq.; (ii) DEA registration; (iii) hospital privileges as applicable; and (iv) professional liability insurance with minimum limits of $[1,000,000 per claim / $3,000,000 aggregate] or as otherwise required.

6.2 Federal Compliance. The Practice and each Partner shall comply with:
a. Federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b;
b. Stark Law, 42 U.S.C. § 1395nn;
c. HIPAA/HITECH and 45 C.F.R. Parts 160 & 164;
d. False Claims Act, 31 U.S.C. § 3729 et seq.

6.3 State Compliance. The Practice shall comply with R.I. Gen. Laws § 5-37-1 et seq., the RI Confidentiality of Health Care Communications and Information Act (§ 5-37.3-1 et seq.), and applicable Rhode Island Department of Health regulations.

6.4 Compliance Program. The Practice shall maintain a written compliance program addressing coding, billing, documentation, HIPAA, OSHA, and fraud-and-abuse controls.

VII. TRANSFER RESTRICTIONS & BUY-SELL

7.1 General Restriction. No Partner may transfer all or any part of an Equity Interest except as permitted herein. Any transferee must be a licensed Rhode Island physician (or otherwise eligible under § 7-5.1-3).

7.2 Right of First Refusal. Upon a bona fide third-party offer, the Practice and remaining Partners have a right of first refusal at the same price and terms, exercisable within [60] days.

7.3 Valuation. Equity Interest value shall be determined by [AGREED FORMULA / INDEPENDENT APPRAISAL]. Default: the most recent annual valuation determined by [QUALIFIED APPRAISER].

7.4 Payment Terms. The purchase price shall be paid: ☐ in a lump sum, or ☐ over [60] months at [PRIME + 2]% per annum.

VIII. WITHDRAWAL, DEATH & DISABILITY

8.1 Voluntary Withdrawal. A Partner may withdraw upon [90] days' written notice. The Practice shall purchase the withdrawing Partner's Equity Interest at the price determined under Section 7.3.

8.2 Death. Upon death, the deceased Partner's estate shall be paid the value of the Equity Interest. The Practice shall maintain key-person life insurance funding this obligation.

8.3 Disability. Upon Disability as defined herein, the disabled Partner's Equity Interest shall be redeemed.

8.4 Involuntary Removal. A Partner may be removed for cause upon unanimous vote of the other Partners. Cause includes: (i) loss of RI medical license; (ii) felony conviction; (iii) exclusion from federal healthcare programs; (iv) material breach of this Agreement.

IX. RESTRICTIVE COVENANTS (RHODE ISLAND-SPECIFIC)

9.1 RI STATUTORY BAN ON PHYSICIAN NON-COMPETES. The Parties acknowledge that under R.I. Gen. Laws § 5-37-33(a), any contract or agreement that creates or establishes the terms of a partnership, employment, or any other form of professional relationship with a physician licensed to practice medicine, and that includes any restriction of the right of such physician to practice medicine, is VOID AND UNENFORCEABLE with respect to such restriction. Restrictions deemed void include, without limitation:
a. Any restriction on the right to practice medicine in any geographic area for any period of time after termination of the partnership, employment, or professional relationship; and
b. Any restriction on the right of such physician to provide treatment, advise, consult with, or establish a physician/patient relationship with any current patient of the Practice; and
c. Any restriction on the right of such physician to solicit or seek to establish a physician/patient relationship with any current patient of the Practice.

9.2 No Post-Termination Non-Compete. Consistent with § 5-37-33, this Agreement contains no post-termination geographic or patient-based non-compete clause against any physician Partner.

9.3 Practice-Sale Exception. The prohibition in § 9.1 shall not apply in connection with a bona fide Practice Sale Transaction qualifying under R.I. Gen. Laws § 5-37-33(b), provided that any restrictive covenant entered into in such transaction shall be for a period of no more than five (5) years from the closing date.

9.4 Permitted Restrictions. The Parties may, consistent with applicable law:
a. Protect the Practice's trade secrets and confidential business information (non-patient information);
b. Prohibit solicitation of Practice employees during employment and for [12] months thereafter (verify enforceability under common-law rule of reason);
c. Enforce ownership of Practice records (subject to patient access rights under HIPAA and R.I. Gen. Laws § 5-37.3-1 et seq.).

9.5 Confidentiality. Each Partner shall maintain the confidentiality of the Practice's proprietary business information, including financial data, fee schedules, vendor terms, and strategic plans, both during and after the partnership relationship.

9.6 Non-Solicitation of Non-Patient Personnel. For [12] months following termination, no former Partner shall actively recruit any non-physician employee of the Practice. (This provision does not restrict the former Partner's medical practice or patient relationships.)

X. DISPUTE RESOLUTION

10.1 Good Faith Negotiation. The Partners shall first attempt to resolve disputes through good-faith negotiation for [30] days.

10.2 Mediation. If unresolved, disputes shall be submitted to non-binding mediation in Rhode Island.

10.3 Arbitration. Any unresolved dispute shall be submitted to binding arbitration under R.I. Gen. Laws § 10-3-1 et seq., administered by [AAA / JAMS] under its commercial rules, before a single arbitrator with healthcare industry experience.

10.4 Governing Law & Venue. This Agreement is governed by Rhode Island law. Any judicial proceeding (including to compel arbitration or enforce an award) shall be brought in the Rhode Island Superior Court, Providence County.

10.5 Equitable Relief. Notwithstanding the foregoing, any Party may seek injunctive or other equitable relief in court to enforce confidentiality, intellectual property, or non-solicitation obligations (but not non-compete obligations, which are unenforceable under § 5-37-33).

XI. GENERAL PROVISIONS

11.1 Amendment. This Agreement may be amended only by a written instrument signed by all Partners.

11.2 Severability. If any provision is held invalid, the remaining provisions shall remain enforceable. If § 5-37-33 is amended or repealed, Section IX shall be reformed to remain consistent with applicable law.

11.3 Entire Agreement. This Agreement (including all schedules) constitutes the entire agreement and supersedes all prior understandings.

11.4 Notices. All notices shall be in writing and delivered to the addresses in Schedule B.

11.5 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, including electronic signatures under R.I. Gen. Laws § 42-127.1-1 et seq.

11.6 No Waiver. Failure to enforce any provision shall not constitute a waiver.

11.7 Successors. This Agreement binds the Partners and their respective heirs, executors, successors, and permitted assigns.

XII. EXECUTION BLOCK

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

Acknowledgment of RI § 5-37-33. Each Partner specifically acknowledges having reviewed Section IX and understands that, under Rhode Island law, the Practice cannot and does not impose post-termination non-compete restrictions on physician Partners outside of a qualifying Practice Sale Transaction.

SCHEDULE A — COMPENSATION FORMULA

[Attach productivity-based, equal-share, or hybrid compensation schedule.]

SCHEDULE B — NOTICE ADDRESSES

[List each Partner's notice address and email.]

SCHEDULE C — INITIAL CAPITAL CONTRIBUTIONS

[Detail cash, property, and services contributed by each Partner.]

SOURCES AND REFERENCES

• R.I. Gen. Laws § 5-37-1 et seq. — Rhode Island Medical Practice Act
• R.I. Gen. Laws § 5-37-21 — Fee splitting prohibited
• R.I. Gen. Laws § 5-37-33 — Restrictive covenants UNENFORCEABLE against physicians (effective July 12, 2016)
• R.I. Gen. Laws § 7-5.1-1 et seq. — Professional Service Corporation Law
• R.I. Gen. Laws § 7-16-67 — LLC Act provisions for professional services
• R.I. Gen. Laws § 7-12.1-1 et seq. — Uniform Partnership Act
• R.I. Gen. Laws § 28-59-1 et seq. — Rhode Island Noncompete Agreement Act
• 42 U.S.C. § 1320a-7b — Federal Anti-Kickback Statute
• 42 U.S.C. § 1395nn — Stark Law