INDIANAPOLIS (AP) _ Lawyers for the state and IBM argued before three members of the state Court of Appeals over whether the state should pay the company more money for the failed effort to privatize the state's welfare system.

The arguments were heard Monday in the continuing legal battle.

Former Gov. Mitch Daniels outsourced the intake of welfare clients to a team of private contractors led by IBM in 2006. He canceled the 10-year, $1.37 billion contract with Armonk, N.Y.-based IBM in 2009 amid widespread performance complaints from clients, their advocates and federal officials.

The state sued IBM for breach of contract and the company countersued. A Marion County judge ruled last year that neither side deserved to win, but awarded IBM $52 million. That was far less than it was seeking.