Abbott Agrees to Pay Nearly $385 Million Over Infant Formula Claims

Key Takeaways

• Nearly $385 Million Settlement: Abbott Laboratories agreed to pay $384,999,040 to resolve federal and state allegations involving certain powdered infant formula and nutritional therapy products manufactured between 2018 and 2022.
• Federal Government Receives $348.7 Million: The payment resolves False Claims Act allegations that Abbott caused government programs to purchase products that did not meet statutory, regulatory and contractual requirements.
• States Receive $36.3 Million: Certain states will receive an additional $36.3 million to settle claims involving their Medicaid and WIC programs.
• Sturgis Conditions at Center of Case: The government alleged that roof leaks, damaged spray dryers and extended periods between cleaning cycles increased the risk of microorganism contamination at Abbott's Sturgis, Michigan, facility.
• Testing and Disclosure Allegations: Prosecutors alleged that Abbott intentionally avoided certain bacterial testing and, in some instances, failed to disclose contamination test results requested by the FDA during inspections in 2019 and 2022.

Deep Dive

Abbott Laboratories has agreed to pay nearly $385 million to settle allegations that it sold infant formula and nutritional products to government programs while failing to meet federal and state requirements at two of its manufacturing facilities, closing a False Claims Act case built around conditions the Justice Department says exposed products to an unacceptable risk of contamination.

The $384,999,040 settlement covers certain powdered infant formula and nutritional therapy products manufactured at Abbott plants in Sturgis, Michigan, and Casa Grande, Arizona, between Jan. 1, 2018, and Dec. 31, 2022.

The federal government will receive $348.7 million to resolve False Claims Act allegations. Another $36.3 million will go to certain states to settle claims involving their Medicaid programs and the Special Supplemental Nutrition Program for Women, Infants, and Children, better known as WIC. The settlement resolves allegations and does not amount to a determination of liability. Much of the government's case rests on what it says was happening inside the Sturgis plant.

In a complaint filed in November 2025, the United States alleged that Abbott caused government programs to purchase powdered infant formula from the facility even though the products failed to meet statutory, regulatory and contractual requirements. Prosecutors said the company knowingly manufactured formula purchased with taxpayer money in conditions that threatened its reliability, quality and safety.

Some of the problems described in the complaint were strikingly ordinary. The roof leaked.

Water ran and dripped over equipment, according to the government, and Abbott responded in part by using temporary devices described as "roof leak umbrellas" to divert it from product-processing areas. The Justice Department alleged that corporate leadership understood the danger posed by moisture but that the underlying causes of the leaks were not permanently addressed.

Moisture mattered because of what else was happening in the plant.

Abbott had documented cracks and pits in spray dryers used to transform liquid formula into powder, according to the complaint. The government alleged that the company continued running the dryers despite the defects, which increased the risk of microorganism contamination, particularly in wet conditions.

Prosecutors also alleged that Abbott extended the number of product batches moving through the dryers between cleaning cycles, allowing the company to increase production while worsening the conditions that could foster contamination.

The government's allegations become more serious when they move from the condition of the equipment to what Abbott allegedly knew about it.

The complaint alleges that Abbott intentionally did not conduct certain testing for bacterial growth because it wanted to avoid obtaining positive results showing contamination. When testing did reveal what the complaint describes as "micro" contamination in certain instances, Abbott failed to disclose those results while responding to requests from the Food and Drug Administration during inspections of the Sturgis plant in 2019 and 2022, according to the Justice Department.

Those allegations turned a manufacturing and food-safety dispute into a False Claims Act case. The government's argument was not simply that conditions at the plant violated regulatory standards. Federal and state programs had paid for products that prosecutors alleged did not satisfy the requirements attached to those purchases.

"It is critical that infant formula manufacturers adhere to regulatory and contractual requirements to ensure that the products they manufacture are safe for the babies who consume them," U.S. Attorney Timothy VerHey for the Western District of Michigan said in announcing the settlement.

Acting Deputy Attorney General Trent McCotter called the agreement "a victory for American families" and said the Justice Department would act against companies accused of violating health and safety requirements intended to protect infants.

The GRC Report is your premier destination for the latest in governance, risk, and compliance news. As your reliable source for comprehensive coverage, we ensure you stay informed and ready to navigate the dynamic landscape of GRC. Beyond being a news source, the GRC Report represents a thriving community of professionals who, like you, are dedicated to GRC excellence. Explore our insightful articles and breaking news, and actively participate in the conversation to enhance your GRC journey.