(AP) UnitedHealth Group Inc. tried Thursday to fend off another investigation into the company's backdating of stock options, asking the Minnesota Appeals Court to block a probe by state Attorney General Lori Swanson.
Swanson is demanding internal documents related to the Minnetonka-based insurer's backdating scandal.
The scandal already prompted shareholder lawsuits and a federal investigation and forced the ouster of former Chairman and Chief Executive Officer William McGuire.
Swanson and former appellate court judge Marianne Short, representing UnitedHealth, argued the case before the appeals court, which has 90 days to rule. UnitedHealth is appealing a lower court ruling that said Swanson's investigation was justified.
Short challenged Swanson to sue the company if she has grounds - but said the attorney general shouldn't have carte blanche to dig for dirt without revealing what it's for.
"If the attorney general has information that something's gone wrong - and who wouldn't have information, it's in every trade journal, we've got press here, everyone knows what's going on, it's going on in all the courts - file your lawsuit," Short said.
The company has acknowledged that McGuire and other employees received stock options that had been backdated to times when the company stock was low, artificially inflating the value of the options to the recipient.
Swanson said the company's potential violations of state laws are enough to justify her 17 document requests and demands for answers to 13 formal questions. She said she prefers to investigate fully before filing a lawsuit.
That prompted a skeptical response from two of the three judges who heard the arguments.
"You're absolutely convinced you have enough right now. You can start the lawsuit tomorrow," said Judge Gordon Shumaker.
Judge Wilhelmina Wright questioned whether Swanson's probe amounted to a "fishing expedition."
Swanson said she wants fuller knowledge of the company's internal practices with the stock options and also talked about the harm to Minnesota shareholders, including the state, which owns $130 million worth of UnitedHealth stock.
"The backdating practices go to the core of the company's finances," Swanson said. "They've had to restate their finances to $1.5 billion. That's a very, very material figure. So to the extent the company has now said for the last dozen years, toss all those financials out the window, no investor can rely on them anymore, that is false advertising."
After the hearing, Swanson said she wants to look at records that haven't been examined by others, including e-mails between board members and board meeting minutes.
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