Gopher State's Suit Galls UnitedHealth

UnitedHealth (UNH Quote - Cramer on UNH - Stock Picks) has some more explaining to do.

The giant health insurer now stands accused of accelerating stock options in addition to backdating them. Minnesota prosecutors announced this week that they have broadened their investigation of the Minnetonka-based company and won court approval to move forward with their case.

The news comes as top executives at two more companies, CNet Networks (CNET Quote - Cramer on CNET - Stock Picks) and McAfee (MFE Quote - Cramer on MFE - Stock Picks), stepped down after being implicated in stock-options scandals of their own. Some worry that UnitedHealth's accomplished CEO, William McGuire, could join that exodus after the company wraps up an extensive investigation of its past stock-option grants.

In the meantime, the state is seeking to determine whether McGuire unfairly profited from his company's success in more ways than one.

"We're looking at three main things," said a spokeswoman for Minnesota Attorney General Mike Hatch. "The first is backdating. The second is CEO compensation. And the third is acceleration."

"While we respect the Court's decision, we continue to believe that the Attorney General is overstepping the limits of his investigative authority in this matter," the company said in an emailed statement. "UnitedHealth has been and is cooperating fully with the ongoing reviews by federal regulators who have jurisdiction and expertise concerning the issues in question and by the Independent Committee of the Board of Directors supported by outside counsel. The Company intends to appeal the Court's ruling."

By backdating some options and accelerating the vesting period for others, UnitedHealth could have made McGuire even richer than he would have otherwise been. McGuire regularly ranks among the best-paid CEOs in the country and, thanks to the value of his stock options, has become a billionaire on paper. He no longer accepts stock options from the company.