MEDICAL PRACTICE PARTNERSHIP AGREEMENT

(Commonwealth of Virginia)

[// GUIDANCE: This template is drafted for use by two or more Virginia-licensed physicians who wish to operate a medical practice as a partnership (general or limited liability partnership). It is intentionally comprehensive and contains bracketed placeholders for customization. Counsel should tailor for entity type (e.g., PLLC vs. partnership), specialty-specific regulations, and any payor or hospital bylaws that may apply.]

TABLE OF CONTENTS

1. Document Header
2. Definitions
3. Operative Provisions
   3.1 Formation & Purpose
   3.2 Term
   3.3 Capital Contributions & Capital Accounts
   3.4 Ownership Interests
   3.5 Management & Voting
   3.6 Partnership Tax Classification
4. Representations & Warranties
5. Covenants & Restrictions
6. Default & Remedies
7. Risk Allocation
   7.1 Indemnification
   7.2 Limitation of Liability
   7.3 Insurance
   7.4 Force Majeure
8. Dispute Resolution
9. General Provisions
10. Execution Block

1. DOCUMENT HEADER

MEDICAL PRACTICE PARTNERSHIP AGREEMENT (this “Agreement”) is entered into and shall be effective as of [EFFECTIVE DATE] (the “Effective Date”) by and among the following Virginia-licensed physicians (each, a “Partner,” and collectively, the “Partners”):

• [PARTNER A NAME, M.D.], Virginia Board of Medicine License No. [____], whose principal office is located at [ADDRESS];
• [PARTNER B NAME, M.D.], Virginia Board of Medicine License No. [____], whose principal office is located at [ADDRESS];
• [ADDITIONAL PARTNERS, if any].

The Partners, intending to be legally bound, hereby agree as follows:

Recitals

A. Each Partner holds an active, unrestricted license to practice medicine in the Commonwealth of Virginia and is in good standing with the Virginia Board of Medicine.
B. The Partners desire to associate as a partnership (the “Partnership”) for the purpose of owning and operating a medical practice in compliance with all applicable federal and Virginia laws, regulations, and ethical standards, including but not limited to Title 54.1, Chapter 29 of the Code of Virginia (the “State Medical Law”).
C. The Partners are willing to contribute capital, property, labor, and skill and to share profits, losses, rights, and liabilities in accordance with the terms herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Partners agree as follows.

2. DEFINITIONS

The following terms shall have the meanings set forth below. All capitalized terms not defined in this §2 have the meanings assigned elsewhere in this Agreement.

“AAA” means the American Arbitration Association.
“Adjusted Capital Account” has the meaning given in Treas. Reg. § 1.704-1(b)(2)(ii)(d).
“Agreement” means this Medical Practice Partnership Agreement, as amended from time to time.
“Arbitration Rules” means the AAA Health Care Payor Provider Arbitration Rules (or any successor rules mutually agreed by the Partners).
“Board of Medicine” means the Virginia Board of Medicine or any successor agency.
“Capital Account” means, with respect to any Partner, the account maintained pursuant to § 3.3(j).
“Capital Contribution” means the total amount of cash, property, or services contributed to the Partnership by a Partner pursuant to § 3.3.
“Code” means the Internal Revenue Code of 1986, as amended.
“Effective Date” has the meaning set forth in the Document Header.
“Indemnified Party” and “Indemnifying Party” have the meanings set forth in § 7.1.
“Injunctive Relief” means temporary, preliminary, or permanent injunctive or other equitable relief.
“Law” means any federal, state, or local statute, regulation, ordinance, or common-law requirement applicable to the Partnership or a Partner.
“Malpractice Claim” means any claim arising out of the rendering or failure to render professional medical services.
“Net Profits” and “Net Losses” mean the income or loss of the Partnership for federal income tax purposes, adjusted as provided in Treas. Reg. § 1.704-1(b)(2)(iv).
“Partnership Interest” means all of a Partner’s rights in the Partnership, including economic, voting, and management rights.
“Practice” means the medical practice conducted by the Partnership.
“Required Insurance” has the meaning set forth in § 7.3.
“State Court” means the courts of the Commonwealth of Virginia having subject-matter jurisdiction.
“Statutory Cap” means the maximum amount recoverable in a medical malpractice action pursuant to Va. Code Ann. § 8.01-581.15 (2023), as may be adjusted from time to time.

3. OPERATIVE PROVISIONS

3.1 Formation & Purpose

a. Formation. The Partners hereby form a [GENERAL PARTNERSHIP / REGISTERED LIMITED LIABILITY PARTNERSHIP] under the Virginia Uniform Partnership Act, Va. Code Ann. § 50-73.79 et seq., for the sole and limited purpose of owning and operating the Practice.
b. Name. The Practice shall operate under the name “[PRACTICE NAME]”, or such other name as approved by the Partners and duly registered with the Virginia State Corporation Commission (“SCC”) and the Board of Medicine.
c. Principal Place of Business. [ADDRESS].
d. Purpose. The Partnership’s purpose is to engage in the practice of [SPECIALTY] medicine and any lawful activities ancillary thereto, including billing, management, and the acquisition of assets reasonably related to such practice, all in compliance with Law.
e. No Unauthorized Practice. The Partners acknowledge Virginia’s corporate-practice and fee-splitting restrictions; accordingly, no Person other than a Virginia-licensed physician (or a professional entity wholly owned by such physicians) may own any Partnership Interest or share in fees generated by the Practice.

[// GUIDANCE: If the Partners intend to practice through a professional LLC or professional corporation, substitute appropriate statutory references (e.g., Va. Code Ann. § 13.1-1100 et seq. for PLLCs).]

3.2 Term

This Agreement commences on the Effective Date and continues until terminated pursuant to § 6 or § 19.

3.3 Capital Contributions & Capital Accounts

a. Initial Contributions. On the Effective Date, each Partner shall contribute the cash or property set forth on Schedule A (the “Initial Contribution”).
b. Additional Contributions. Additional contributions shall require affirmative vote of at least [__]% of all Partnership Interests.
c. Capital Accounts & Adjustments. The Partnership shall maintain Capital Accounts in accordance with § 704(b) of the Code and the Treasury Regulations promulgated thereunder.
d. Return of Capital. No Partner is entitled to withdraw or receive interest on Capital Contributions except as expressly provided herein.
e. Failure to Contribute. If a Partner fails to make a required Capital Contribution, such failure constitutes an Event of Default under § 6.1(d).

3.4 Ownership Interests

a. Percentages. Each Partner’s Percentage Interest is set forth on Schedule A.
b. Issuance & Transfer Restrictions. No Partnership Interest may be sold, assigned, pledged, encumbered, or otherwise transferred, whether voluntarily or involuntarily, except (i) with prior written consent of Partners holding at least [__]% of the non-transferring Interests, and (ii) to a transferee who is a Virginia-licensed physician in good standing.
c. Admission of New Partners. New Partners may be admitted only with the unanimous approval of existing Partners and execution of a joinder to this Agreement.

3.5 Management & Voting

a. Management Committee. The Practice shall be managed by a Management Committee consisting of [__] Partners, elected annually by Partners holding a majority of the Partnership Interests.
b. Matters Requiring Supermajority. The following actions require approval of Partners holding at least [__]% of the Partnership Interests:
 (i) Mergers, acquisitions, or sale of substantially all assets;
 (ii) Admission of a new Partner;
 (iii) Amendment of this Agreement.
c. Day-to-Day Operations. Subject to the foregoing, any Partner may bind the Partnership in the ordinary course of medical practice.

3.6 Partnership Tax Classification

The Partners intend that the Partnership be classified as a partnership for federal and state income tax purposes and not as a corporation. If eligible, the Partnership may elect to be treated as a qualified joint venture or other tax-preferred status upon unanimous Partner approval.

4. REPRESENTATIONS & WARRANTIES

Each Partner represents and warrants, as of the Effective Date and on a continuing basis:

a. License & Good Standing. The Partner holds an active, unrestricted license to practice medicine in Virginia and is in compliance with all continuing education, insurance, and other requirements of the Board of Medicine.
b. No Prior Disqualifications. The Partner has not been convicted of a felony, excluded from participation in federal health-care programs under 42 U.S.C. § 1320a-7, or had a medical license revoked or suspended.
c. Authority & Capacity. The Partner has full power and authority to enter into and perform this Agreement without violating any other agreement or Law.
d. No Proceedings. There is no pending or threatened claim, investigation, or proceeding that would materially impair the Partner’s ability to perform hereunder.
e. Survival. These representations and warranties survive the Partner’s withdrawal or the termination of this Agreement for a period of [__] years.

5. COVENANTS & RESTRICTIONS

5.1 Affirmative Covenants

a. Licensure & CME. Each Partner shall maintain an active Virginia medical license, fulfill all continuing-education obligations, and timely remit all fees.
b. Compliance Program. The Partnership shall implement and maintain a written compliance plan addressing HIPAA, Stark, Anti-Kickback, and Virginia fee-splitting prohibitions.
c. Malpractice Insurance. Each Partner shall obtain and keep in force professional liability insurance in the minimum amount of [coverage limits] per claim and [aggregate limits] per policy year, naming the Partnership as an additional insured.
d. Recordkeeping. Partners shall prepare and maintain medical and financial records in accordance with CMS, Virginia, and specialty-board standards.

5.2 Negative Covenants

a. Fee Splitting. The Partners shall not divide, share, or split fees with any person or entity in a manner prohibited by Law.
b. Outside Activities. No Partner shall engage in a competing medical practice within [radius] miles of the Practice for a period of [__] years following withdrawal, except as set forth in § 5.3.
c. Non-Solicitation. For [__] years after withdrawal or expulsion, a Partner shall not solicit any employee or patient of the Practice.

5.3 Exceptions; Physician-Friendly Carve-Outs

The restrictive covenants shall not apply to:
(i) permitted academic or charitable practice;
(ii) activities performed at federal facilities (e.g., VA hospitals) where state restrictions are pre-empted; or
(iii) any situation in which enforcement would contravene public policy or violate Va. Code Ann. § 54.1-2904.

6. DEFAULT & REMEDIES

6.1 Events of Default

The occurrence of any of the following constitutes an “Event of Default”:
a. Failure to maintain licensure;
b. Conviction of a felony or crime of moral turpitude;
c. Gross negligence or willful misconduct causing material harm to the Practice;
d. Failure to make any required Capital Contribution;
e. Breach of a material covenant, representation, or warranty that remains uncured for [30] days after written notice.

6.2 Remedies

a. Mandatory Buy-Out. Upon an Event of Default, the non-defaulting Partners may elect to purchase the defaulting Partner’s Partnership Interest at the lesser of (i) Fair Market Value (determined under § 6.3) or (ii) [__]% thereof.
b. Suspension. For licensure-related defaults, the defaulting Partner shall be immediately suspended from the Practice until cured.
c. Injunctive Relief. The Partnership may seek temporary, preliminary, or permanent injunctive relief in State Court to restrain breaches of § 5.
d. Attorney Fees. The prevailing party in any action to enforce this Agreement is entitled to reasonable attorney fees and costs.

6.3 Valuation Methodology

Fair Market Value shall be determined by an independent appraisal firm experienced in medical practice valuation, applying a [income / market / cost] approach, exclusive of any goodwill attributable to the withdrawing Partner’s personal services.

7. RISK ALLOCATION

7.1 Indemnification

a. Indemnification by Partnership. The Partnership shall indemnify, defend, and hold harmless each Partner (each, an “Indemnified Party”) from and against all losses, liabilities, damages, and expenses (“Losses”) arising out of the Indemnified Party’s activities on behalf of the Partnership, except to the extent caused by the Indemnified Party’s gross negligence, willful misconduct, or knowing violation of Law.
b. Indemnification by Partners (Malpractice). Each Partner (an “Indemnifying Party”) shall indemnify, defend, and hold harmless the Partnership and all other Partners from and against any Losses arising out of a Malpractice Claim attributable to the Indemnifying Party’s professional services, but only to the extent such Losses are not covered by insurance.
c. Procedure. The party seeking indemnification shall give prompt written notice and cooperate in the defense. The Indemnifying Party may assume the defense with counsel reasonably satisfactory to the Indemnified Party.

7.2 Limitation of Liability

The liability of the Partnership and each Partner with respect to any Malpractice Claim shall not exceed the Statutory Cap, and damages shall be limited accordingly. Nothing herein limits liability that cannot lawfully be limited.

7.3 Insurance

a. Required Insurance. The Partnership shall maintain:
 (i) Professional liability (“malpractice”) insurance with limits at least equal to the Statutory Cap;
 (ii) General commercial liability insurance of at least [$____] per occurrence;
 (iii) Cyber-liability insurance compliant with HIPAA standards.
b. Tail Coverage. Upon withdrawal or dissolution, each Partner shall secure tail coverage for not less than [__] years.

7.4 Force Majeure

A party is excused from performance for the period and to the extent performance is prevented by events beyond reasonable control, including acts of God, pandemics, government orders, or disasters, provided that the affected party (i) promptly notifies the others and (ii) uses commercially reasonable efforts to resume performance.

8. DISPUTE RESOLUTION

8.1 Governing Law

This Agreement and any dispute arising hereunder are governed by the laws of the Commonwealth of Virginia (“Governing Law”), without regard to conflicts-of-law principles.

8.2 Forum Selection & Injunctive Relief

For any action seeking Injunctive Relief or to compel or enforce arbitration, the parties irrevocably submit to the exclusive jurisdiction of the State Courts located in [COUNTY/CITY], Virginia, and waive any objection based on venue or forum non conveniens.

8.3 Arbitration

Except for (i) Injunctive Relief and (ii) actions to enforce an arbitration award, any controversy or claim arising out of or relating to this Agreement shall be resolved by confidential, binding arbitration administered by the AAA under the Arbitration Rules then in effect.
a. Seat & Law. The seat of arbitration shall be [CITY], Virginia, and the arbitrator shall apply Governing Law.
b. Arbitrator Qualifications. The tribunal shall consist of one arbitrator who is (1) a licensed attorney with at least 10 years of experience in health-care law, and (2) independent of the parties.
c. Discovery. Limited discovery is permitted as the arbitrator deems necessary, including production of documents and up to [3] depositions per side.
d. Award. The arbitrator may award any relief available at law or in equity, consistent with § 7.2, and shall award reasonable attorney fees to the prevailing party. Judgment on the award may be entered in any court of competent jurisdiction.
e. Confidentiality. All arbitration proceedings, filings, and awards shall be confidential, except as necessary to enforce an award or as required by Law.

8.4 Jury Waiver

[OPTION-A – Include] EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT.
[OPTION-B – Omit] [// GUIDANCE: Delete if jury waiver is not desired.]

9. GENERAL PROVISIONS

9.1 Amendment. This Agreement may be amended only by a written instrument signed by Partners holding at least [__]% of the Partnership Interests, except where a higher threshold is expressly required.

9.2 Waiver. No waiver of any provision shall be effective unless in writing and signed by the waiving party. A waiver on one occasion is not a waiver on any subsequent occasion.

9.3 Assignment. No Partner may assign any rights or delegate any obligations under this Agreement without prior written consent of Partners holding at least [__]% of the Partnership Interests.

9.4 Successors & Assigns. This Agreement binds and benefits the parties and their permitted successors and assigns.

9.5 Severability. If any provision is held invalid or unenforceable under Governing Law, the provision shall be reformed to the minimum extent necessary to make it enforceable, and the remaining provisions shall continue in full force.

9.6 Integration. This Agreement (including schedules and any joinders) constitutes the entire agreement among the parties with respect to its subject matter and supersedes all prior agreements, understandings, and representations.

9.7 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which is deemed an original, and all of which together constitute one instrument. Signatures delivered by facsimile, PDF, or secure electronic signature platform have the same effect as originals.

9.8 Notices. All notices must be in writing and delivered by (i) personal delivery, (ii) certified mail, return receipt requested, (iii) nationally recognized overnight courier, or (iv) secure email with delivery confirmation, to the addresses set forth in the Document Header (or such other address as a party may designate). Notice is effective upon receipt.

9.9 Headings & Interpretation. Headings are for convenience only and do not affect interpretation. “Including” means “including without limitation.” All references to “§” or “Section” mean sections of this Agreement.

9.10 No Third-Party Beneficiaries. Except as expressly provided in § 7 (Indemnification), no third party is intended to benefit from, or may enforce, this Agreement.

10. EXECUTION BLOCK

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

[Corporate Authority Certification, if Partner signs on behalf of a professional entity]
[Notary acknowledgment, if required for recordation or SCC filing]

Schedule A – Partner Capital Contributions & Percentage Interests

[// GUIDANCE:
1. Attach additional schedules for buy-out formulas, compensation methodologies (e.g., productivity, RVU, collections), and compliance policies as needed.
2. Confirm that all restrictive covenants (radius, duration) are reasonable under current Virginia law to avoid unenforceability.
3. Review malpractice insurance coverage to ensure alignment with hospital credentialing and payor contract requirements.
4. File any required partnership or trade-name certificates with the SCC and register the DBA with the county or city clerk.]