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AG Nessel Secures $384 Million Medicaid Fraud Settlement with Abbott Over Infant Formula Operations

LANSING – Michigan Attorney General Dana Nessel has announced a $384 million settlement with Abbott Laboratories (Abbott) to settle allegations that the company caused false claims to be submitted to federal and state programs arising from its failure to manufacture certain powder infant formula and nutritional therapy products in compliance with federal and state requirements. Abbott, an Illinois-based health care company that manufactures and sells infant formula and nutritional therapy products, will pay $348,700,868 to the United States to resolve the False Claims Act allegations. As part of the settlement, Michigan will receive $469,890.27 in restitution and other recoveries.

“There should be no question for parents of whether the formula they give to their babies is safe,” said Attorney General Nessel. “This settlement makes clear that corporations cannot cut corners on critical health and safety measures. My office remains committed to protecting the most vulnerable among us and ensuring manufacturers who operate in our state comply with regulations that safeguard Michigan residents.”

The national federal and state civil settlement resolves allegations that Abbott caused false claims to be submitted, between January 1, 2018, and December 31, 2022, to federal and state programs arising from Abbott’s failure to manufacture certain powder infant formula and nutritional therapy products at its Sturgis, Michigan, and Casa Grande, Arizona, facilities in compliance with federal and state statutory, regulatory, and contractual requirements.

The federal and state governments allege Abbott knowingly manufactured infant formula purchased with taxpayer dollars in an environment that put the products at unacceptable risk of microorganism contamination and significantly impacted the products’ reliability, quality, and safety. Specifically, Abbott allegedly failed to maintain its manufacturing equipment, failed to control the presence of water that put the products at increased risk of microorganism contamination and, in certain instances, failed to disclose test results indicating the presence of microorganism contamination when responding to requests from the U.S. Food and Drug Administration during 2019 and 2022 inspections at the Sturgis facility. Abbott’s misrepresentations allegedly caused the Women, Infants, and Children (WIC) program and state Medicaid programs to purchase powder infant formula and nutritional products manufactured at these facilities despite the products’ failure to meet statutory, regulatory, and contractual requirements.

The U.S. Department of Agriculture (USDA) funds and regulates the Special Supplemental Nutrition Program for WIC, which provides nutritional support — including infant formula — to eligible participants. More than half of all infant formula purchased in the United States is paid for with USDA funds through WIC. 

This settlement arises out of the qui tam lawsuit initially filed in 2022 in the United States District Court for the Western District of Michigan under the federal False Claims Act and various state false claims statutes. 

A National Association of Medicaid Fraud Control Units (NAMFCU) Team participated in the investigation and conducted settlement negotiations with Abbott on behalf of states. The Team included representatives from the Offices of the Attorneys General for the states of California, Colorado, Connecticut, Florida, Maryland, Massachusetts, Michigan, New York, Ohio, Oregon, and Tennessee.

The Attorney General’s Health Care Fraud Division (HCFD) handled this case for the Department. The HCFD is the federally certified Medicaid Fraud Control Unit for Michigan, and it receives 75% of its funding from the U.S. Department of Health and Human Services under a grant award totaling $5,517,524.00 for the fiscal year 2026. The remaining 25% percent, totaling $1,839,170.00, is funded by the State of Michigan.

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