Abbott: $385 Million Infant Formula False Claims Settlement Reached

• Abbott Laboratories will pay $385 million to resolve claims related to contaminated baby formula manufactured at multiple plants, including its Sturgis, Michigan, facility.
• The Justice Department alleged Abbott knowingly hid manufacturing defects and failed to test for bacteria from 2018 to 2022 to retain government contracts.
• The settlement addresses false certifications that allowed Abbott to continue collecting Medicaid and other government funds for infant formula.
• Three whistleblowers, former Abbott employees, initiated the complaint in 2022 and will receive nearly $70 million from the settlement.
• Abbott denies fault or liability, stating government tests of unopened formula were negative for suspected bacteria, despite the substantial payment.

The Justice Department alleged Abbott knowingly hid manufacturing defects and failed to test for bacteria from 2018 to 2022 to retain government contracts.

Abbott Laboratories has agreed to a $385 million settlement to resolve allegations of manufacturing and distributing contaminated baby formula, according to a recent announcement. The agreement, reached in Michigan federal court, addresses claims that the Illinois-based healthcare company produced infant formula and other nutrition products in environments that failed to meet federal and state safety standards. This significant financial resolution comes after a period of intense scrutiny following contamination concerns at Abbott’s Sturgis, Michigan, plant, which is the largest baby formula facility in the United States.

The issues at the Sturgis Michigan plant prompted a massive nationwide recall of powdered infant formula, contributing to widespread supply shortages experienced in 2022. The settlement specifically targets claims that Abbott knowingly concealed critical manufacturing defects and failed to conduct necessary bacteria testing, thereby jeopardizing public health. Despite the substantial payment, Abbott maintains that the settlement does not constitute an admission of fault or liability, asserting that government tests of unopened infant formula products were negative for bacteria initially suspected.

The Justice Department (DOJ) alleged that Abbott knowingly hid various defects within its manufacturing facilities, including roof leaks and worn-out equipment, which significantly increased the risk of contamination. These alleged concealments occurred between 2018 and 2022, a period during which the company reportedly failed to perform adequate testing for bacteria. The DOJ contended that these actions were taken to maintain government contracts, despite the compromised safety conditions.

Officials emphasized the gravity of the situation, with Associate Attorney General Stanley E. Woodward Jr. stating that no company should risk the health and safety of infants by allowing unsanitary conditions to persist in baby formula manufacturing. Investigators found that Abbott knowingly produced infant formula in environments prone to microorganism contamination, directly contradicting federal and state requirements designed to ensure product safety and quality.

The legal action against Abbott originated from an initial complaint filed in 2022 by former Abbott employees, acting as whistleblowers. This complaint, later joined by the federal government and all 50 states, alleged that Abbott manufactured, distributed, and sold adulterated infant formula that did not comply with FDA requirements. The three whistleblowers played a crucial role in initiating federal investigations into Abbott’s facilities and are set to receive nearly $70 million as their share of the settlement.

The United States subsequently filed its own complaint in intervention in 2025, specifically targeting Abbott’s false certifications that enabled the company to continue receiving Medicaid and other government funds. The $385 million infant formula false claims settlement includes just under $350 million allocated to the federal government, with approximately $36 million designated for state Medicaid and similar programs. Acting Deputy Attorney General Trent McCotter underscored the settlement as a victory for American families, asserting that the safety of children is non-negotiable and that the DOJ will act decisively against misconduct.

The case highlights the critical importance of compliance in industries providing essential goods, particularly when government contracts are involved. More than half of all infant formula purchased in the country is funded through the U.S. Department of Agriculture’s Special Supplemental Nutrition Program for Women, Infants and Children (WIC). This significant government involvement underscores the necessity for manufacturers to adhere strictly to regulatory and contractual requirements to ensure the safety of products consumed by vulnerable populations.

U.S. Attorney Timothy VerHey for the Western District of Michigan reiterated the vital need for infant formula manufacturers to meet all regulatory and contractual obligations to guarantee product safety. The DOJ Abbott Medicaid WIC settlement sends a clear message that infant formula manufacturing compliance failure carries substantial consequences, reinforcing the government's commitment to protecting public health and holding companies accountable for their certifications and product quality.

Compliance officers and legal counsel for companies with government contracts, particularly in regulated sectors like food and pharmaceuticals, should review internal controls and certification processes to prevent false claims related to product safety and quality, as non-compliance can lead to substantial penalties and whistleblower actions.

Source: Original reporting via The Associated Press