Upstart faces money woes

By Holly Michels, of The Montana Standard - 08/01/2007

A telemedicine start-up that came to Butte with plans to hire nearly 150 people and revolutionize the way doctors and patients communicate is now struggling to pay its employees.

After Ensi-Med announced its opening last week with a luncheon featuring Dr. Patch Adams, nationally known medical doctor, clown and sociologist, golfing at the Old Works in Anaconda and a picnic at Basin Creek Reservoir, it is now the subject of state and local investigations.

At least three current or former workers at Ensi-Med filed complaints with the Montana Department of Labor and Industry Wage and Hour Unit in July, claiming they haven't been paid for one to three months, Tonya McCormack, bureau chief of the department said.

A former intern also said she contacted the Butte-Silver Bow police department to report her paycheck was returned for insufficient funds.

Ensi-Med, located on the third floor of the Thornton Building, 65 E. Broadway St., uses broadband networks to connect patients and doctors through video phone conferencing and allows for transmission of medical records.

Sheriff John Walsh and McCormack both separately confirmed they were investigating the complaints, but said they couldn’t discuss an ongoing probe.

Ensi-Med’s Chief Executive Officer Benjamin McGainey on Monday acknowledged the state investigation, but said he couldn’t comment, citing privacy concerns. He said his contract and that of the employees prevent him from discussing personnel and company issues. McGainey previously said about 15 people work at Ensi-Med.

McGainey confirmed last week Ensi-Med doesn’t have any signed contracts, but Monday he told The Montana Standard said he’s close to closing a large deal locally.

Former warehouse manager Harold Smith and current executive assistants Barbara Hill and Denise Sacry said McGainey issued June paychecks, but gave instructions not to deposit them until late in the month.

When employees tried to draw on the checks, they were returned for insufficient funds, Hill and Sacry said. They also claimed some employees were also not paid in April or May.

Intern files complaint Crystal Tiger Hughes, a Montana Tech student who worked as an intern at Ensi-Med, said she quit June 30 after not being paid. Hughes mailed a letter to McGainey in July stating her payroll check dated June 21 was returned for insufficient funds and demanded $1,091.89. She then filed a report with the Employment Relations Division of the state Department of Labor and Industry.

When questioned by The Montana Standard on Monday, McGainey said he was unaware employees were complaining about not being paid and didn’t believe they would since their contract prevents from discussing the company.

“(They) have not talked to me directly about any of this stuff,” he said. “(It has) not been expressed directly to me or to the board at all … I cannot deal with complaints that I’m never getting.” Hughes provided The Standard with a copy of a letter from the Employment Relations Division of the Department of Labor and Industry to McGainey dated July 25. The letter outlines Hughes’ claim and asks for a response by Aug. 6 disputing the claim or a cashier’s check for 110 percent of Hughes check plus an additional $1,525.70 for a total of $2,912.70.

McGainey said employees may have been dissatisfied for various reasons unrelated to pay.

“Any company has people that don’t agree with management decisions,” he said. “(They) don’t like if they don’t have enough free Pepsi. If they didn’t get enough coffee, you’re going to have people that are going to be disgruntled. That’s the life of business.” McGainey wouldn’t confirm if employees were paid in June but said, “We pay our staff; we are obligated and responsible to pay our staff.” Butte incentives attracted Ensi-Med Ensi-Med’s former president of U.S. operations Alex Porter said Ensi-Med came to Butte after McGainey bought a stake in an Australian firm that planned to make medical syringes here. That didn’t pan out, but from discussions with former BLDC executive director Evan Barrett and local officials, McGainey knew about Butte’s incentives for upstarts.

Barrett said Tuesday he remembers talking with Porter about the syringe company several years ago, but said that project didn’t pan out.

“At the time (the syringe production) seemed like a worthwhile project,” Barrett told The Standard on Tuesday. “There were some issues about how the company’s stock broke out and who controlled it.” Later, after Barrett left the BLDC to work as chief business officer of Gov. Brian Schweitzer’s Office of Economic Development, he said he saw the project return.

“It kind of popped to the surface, then slid down below ... Next time it popped up Benjamin (McGainey) was in charge of it and it was more about (telemedicine).” Chief Executive Paul Babb said Butte-Silver Bow hasn’t helped Ensi-Med financially.

“They never approached us about going into the TIFID,” he said. In a TIFID, a portion of property taxes is diverted into a special account for economic development Andy Zdinak, marketing director of the Butte Local Development Co., said Ensi-Med doesn’t have loans with the BLDC.

“They did pick up an application, but they never returned it,” he said.

Ensi-Med’s former executive team of Porter, along with Toby Brown, executive senior vice president of U.S. marketing, and Greg Thybulle, chief information officer, all quit in May, citing McGainey’s “irresponsible management” and said he ignored their advice.

"Every time we made a management decision he’d change it once we were gone or our backs were turned,” said Brown, who owns two companies and runs a medical practice based in Chicago. “Benjamin was a dictator and he needed to run and drive and steer this whole project."

Porter, a global medical circulator for a pharmaceutical company, said McGainey never told the executives details about his financing and the group lost its patience.

“We said if he’s not willing to show us where the money’s coming from, this will be our last trip (to Butte)."

Brown said the executive team told McGainey not to hire staff.

“He was going too fast, too large, too much. What I find very frustrating about this whole incident is that it really didn’t have to occur. It would be a lot simpler if he would have just listened from the beginning."

Thybulle, a manager at Hewlett-Packard in Seattle, said several area vendors haven’t been paid for services, including computer, furniture and office supply stores as well as hotels and rental car chains.

Vendors contacted by The Montana Standard refused to comment or confirm working with Ensi-Med.

The executives also were never paid.

"I’ve been given checks that have all come back with non-sufficient funds,” Thybulle said. His contract was for $200,000 annually.

Porter said his salary was comparable to his current jobs and “within six figures.” Brown said hers was “comparable to what a senior vice president of marketing and sales would get in (a) major metropolitan city."

All the executives kept their previous jobs, but Brown said what really upset her was Ensi-Med’s spending habits.

"You’re hearing about their grand opening, Mr. Patch Adams (hired to give a motivational speech), those people had to eat and stay somewhere. (Ensi-Med) is sponsoring Evel Knievel Days. And you have people wondering when will they be paid. It doesn’t look like he’s trying to make a dent. It’s all about the flash (McGainey likes participating in), but he refuses to pay his people."

— Reporter Holly Michels may be reached via e-mail at holly.michels@lee.net.

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