The Colorado Springs City Council gave Memorial Health System’s board an ultimatum Tuesday: resign or be fired.

After meeting in executive session for 1 ½ hours, the council voted 7-0 to ask the city-owned hospital’s Board of Trustees to resign voluntarily by 5 p.m. Wednesday or be removed from office. Council members Bernie Herpin and Brandy Williams were absent.

The council’s request comes after the board voted to give outgoing Memorial CEO Dr. Larry McEvoy a $1.15 million separation agreement that includes $1 million in severance pay, a 2007 Toyota Camry Hybrid and $20,000 to help find a new job.

“I am concerned that the harmony we need to move forward cannot be achieved with the current board of directors. I’m asking the board to step aside,” Councilman Merv Bennett said while making the motion to remove the board if the board didn’t resign.

Council President Scott Hente said he supported the motion with a “heavy heart.”

“I know many of the board members. I know they’re great people. I know they act in the best interests of the community, and they get paid even less than we do,” he said. “But I think this council and this community wants to do what’s best for the hospital.”

The council also voted 7-0 to take two weeks to give the city’s legal team a chance to review the severance agreement, which ignited public outrage and the board’s standoff with council. City Attorney Chris Melcher said he and his staff are already looking into the matter.

At least four board members, including Chairman James Moore and Vice Chairman Vic Andrews, sat in solemn silence as the council cast its votes and then dashed out of City Hall without comment.

Moore could not be reached after the meeting.

Reached Tuesday night, McEvoy said that he welcomed a review of the agreement.

 “I think a hard look at the process will show that the process was not just valid, but that the contract itself was very reasonable by accepted industry standards,” he said.

 McEvoy said he hadn’t spoken with board members, but that he had been proud to work with them for four and a half years.

 “I think they’ve acted within their bounds,” he said. “I think they’ve done their job and done it well.”

Moore signed the terms of the agreement with McEvoy on April 19, four days before presenting it to council.

The severance cash comes from hospital revenue. Memorial receives no direct taxpayer support.

In an interview Monday, Moore said the terms of the agreement are akin to an offer on a home and constitute a legally binding contract – even though the final separation agreement with McEvoy has not yet been signed.

“I have had attorneys tell me that if we do not proceed, that we could be in default of a contract,” Moore said.

Hente said he met Saturday with Moore and Andrews in hopes of finding a compromise.

But Monday, the Memorial board voted 8-1 to reaffirm the agreement.

“In this particular case, they made a decision the community could not accept,” Hente said. “This sent a message to the employees that we valued one employee over all the others.”

Former City Attorney Jim Colvin, speaking as a citizen, told the council that allowing the $1.15 million separation agreement to move forward would harm “and perhaps even destroy” citizens’ trust in the council.

“In my opinion, the Board of Trustees has dug a hole that you will continue to dig if you ratify their action,” he said. “That hole is your integrity and trustworthiness as a legislative governing body of the city of Colorado Springs.”

The council scheduled a meeting at 9 a.m. Friday to appoint a new board of at least five members. Several council members said they’ve already had discussions with potential board members.

The new board will be charged with keeping Memorial on a steady course until the city’s voters have a chance to approve or reject leasing the hospital to University of Colorado Health. That lease deal is still being negotiated, but the city hopes to put the question to voters in August.

Tuesday’s votes were greeted with applause in council chambers.

Dr. Ronald Rains, a Memorial physician, said the board had lost the trust of the hospital’s staff amid declining morale.

“I think I can speak loudly for everyone at the hospital that this was the nail in the coffin,” he said of the board’s decision to award McEvoy 18 months’ severance when his existing contract called for 6 months’ pay.

Councilwoman Angela Dougan said she hopes the board will step down voluntarily.

“I think it was just, give them a chance to do the right thing,” she said of the 5 p.m. Wednesday deadline.

Carolyn Flynn, a Memorial nurse and a member of the city task force that recommended leasing Memorial to University of Colorado Health, said that there was blame on all sides and that she was concerned the political brinkmanship could threaten the health of the hospital.

“Grandstanding and political power plays have got to stop,” Flynn said. “Everyone owns a piece of this one.”

Sean Paige, a former city councilman who is now with the group Americans for Prosperity, said that it was clearly excessive for McEvoy to receive three times the severance specified in his existing contract.

“It sends a terrible message to the public,” Paige said.

Americans for Prosperity is planning a noon rally Wednesday at Boulder Park next to Memorial Central to support the removal of the board and call on council to rescind McEvoy’s departure agreement.

Paige said that even if the agreement in principle the board signed with McEvoy is difficult to unwind without facing a lawsuit, the city should give it a try anyway.

“I would argue that maybe it’s worth going to court over,” Paige said.

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