South Dakota Medical Practice Partnership / Professional Entity Agreement

MEDICAL PRACTICE PARTNERSHIP AGREEMENT

State of South Dakota

1. Parties and Formation

Partners / Members:

Each Partner represents that they hold a current, unrestricted license to practice medicine in South Dakota under SDCL ch. 36-4 and meet the ownership eligibility requirements of SDCL § 47-11-1 (or, for a PLLC, SDCL ch. 47-34A).

2. Purpose and Scope of Practice

The Practice is organized solely to engage in the practice of medicine and surgery through its licensed Partners and Employees, consistent with SDCL § 47-11-6. The Practice may not engage in any business that constitutes the unauthorized corporate practice of medicine under SDCL § 36-4-8.1.

Specialty / Service Lines: [____________________________________________________________]

3. Capital Contributions and Capital Accounts

☐ Initial cash contributions as set forth in Section 1.
☐ Property/equipment contributions valued at fair market value: [________________________________]
☐ Future capital calls require [____] % approval of Partners.

Each Partner shall maintain a capital account credited with contributions and allocated profits and debited with distributions and allocated losses.

4. Allocation of Profits, Losses, and Distributions

☐ Pro rata to ownership percentages.
☐ Productivity-based formula (RVUs / collections): [________________________________]
☐ Hybrid: [____] % equal share; [____] % productivity.

Distribution Schedule: ☐ Monthly ☐ Quarterly ☐ Other: [____________________]

All compensation arrangements must comply with the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), Stark Law (42 U.S.C. § 1395nn), and the fee-splitting prohibition of SDCL § 36-4-30(8).

5. Governance

Managing Partner: [________________________________]
Term: [____] year(s), renewable by vote of Partners.

6. Clinical Autonomy and Compliance

☐ Each Partner retains independent medical judgment regarding diagnosis, treatment, and patient care.
☐ The Practice will adopt and maintain written policies for:
☐ HIPAA Privacy and Security (45 C.F.R. Parts 160 & 164)
☐ Medical records retention under South Dakota law and Board of Medical and Osteopathic Examiners rules
☐ Credentialing and peer review
☐ Coding, billing, and federal payor compliance (Stark, AKS, False Claims Act)
☐ Incident reporting and quality improvement

7. Restrictive Covenants

7.1 Confidentiality and Trade Secrets

Each Partner shall not, during or after the term of this Agreement, disclose or use for any purpose outside the Practice any confidential or proprietary information of the Practice, including patient lists, fee schedules, payor contracts, and trade secrets. This obligation survives withdrawal or dissolution.

7.2 Non-Solicitation of Employees

For a period of [____] months (not to exceed twelve) following withdrawal, a former Partner shall not solicit for employment any non-physician employee of the Practice. This restriction does not apply to solicitation of, or services rendered to, patients.

7.3 No Restriction on Practice of Medicine

Consistent with SDCL § 53-9-11.1, nothing in this Agreement restricts the right of any Partner to practice medicine or provide healthcare services in any geographic area or for any period of time after termination of the partnership relationship.

7.4 Sale-of-Practice Exception

In the event of a sale or purchase of the Practice as a whole (or of a Partner's entire interest in connection with such sale), the parties may negotiate a reasonable non-compete covenant as permitted by SDCL § 53-9-11.1 and SDCL § 53-9-11.

8. Withdrawal, Death, Disability, and Buyout

☐ Withdrawal notice: [____] days written notice required.
☐ Mandatory buyout on death, permanent disability (defined: [____________________]), loss of medical license, or expulsion.
☐ Valuation method: ☐ formula based on trailing 12-month collections ☐ independent appraisal ☐ book value plus accounts receivable.
☐ Payment terms: [____] % down; balance over [____] months at [____] % interest.

The departing Partner remains responsible for completion of medical record transfers and patient notification consistent with South Dakota Board of Medical and Osteopathic Examiners requirements.

9. Insurance

10. Dispute Resolution

☐ Good-faith negotiation between Partners.
☐ Mediation under the South Dakota Rules of Civil Procedure.
☐ Binding arbitration administered by the American Arbitration Association under its Commercial Rules, seated in [____________________], South Dakota.
☐ Litigation in the courts of [____________________] County, South Dakota.

Governing Law: This Agreement is governed by the laws of the State of South Dakota.

11. Miscellaneous

☐ Entire Agreement; supersedes prior agreements.
☐ Severability — if any provision is held unenforceable, the remainder continues in effect.
☐ Amendments only by written instrument signed by all Partners.
☐ Notices delivered to the addresses listed in Section 1.

12. Signatures

Sources and References

• SDCL Title 36, Chapter 4 — Physicians and Surgeons: https://sdlegislature.gov/Statutes/36-4
• SDCL § 36-4-30 — Unprofessional conduct: https://law.justia.com/codes/south-dakota/2022/title-36/chapter-04/section-36-4-30/
• SDCL Title 47, Chapter 11 — Medical Corporations: https://sdlegislature.gov/Statutes/47-11
• SDCL § 47-11-6 — Employees subject to Medical Practice Act: https://law.justia.com/codes/south-dakota/title-47/chapter-11/section-47-11-6/
• SDCL Title 47, Chapter 34A — Uniform LLC Act: https://sdlegislature.gov/Statutes/47-34A
• SDCL § 53-9-11 — Restraint of trade exceptions: https://sdlegislature.gov/Statutes/53-9-11
• SDCL § 53-9-11.1 — Prohibition on healthcare provider non-competes (eff. 7/1/2021): https://dehs.com/new-south-dakota-law-prohibits-healthcare-non-compete-agreements/
• Stark Law (42 U.S.C. § 1395nn) and Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)): https://oig.hhs.gov/compliance/physician-education/