Maryland to Recover over $3M as Abbott Laboratories to Pay $384M+ Nationwide in Infant Formula Fraud Settlement

The Office of the Attorney General of Maryland, joined by 39 other states and the federal government, has reached a nationwide civil settlement exceeding $384 million with Abbott Laboratories. The agreement resolves False Claims Act allegations that the healthcare company defrauded government health programs by manufacturing powder infant formula and nutritional therapy products in facilities that failed to comply with state and federal contamination safety standards.

Settlement Terms & Financial Breakdown

* National Recovery: Abbott will pay roughly $348.7 million to the federal government to resolve False Claims Act claims, alongside $35.5 million distributed to participating states for Medicaid-related claims.

* Maryland's Direct Share: Maryland was one of five states that directly intervened to litigate the action (joining California, Connecticut, Massachusetts, and Tennessee) and will recover more than $3 million.

* Covered Timeframe: Resolves false claims submitted to state and federal programs between January 1, 2018, and December 31, 2022.

Key Allegations Against Manufacturing Facilities

* Unsanitary Conditions at Sturgis & Casa Grande Plants: The lawsuit alleged that Abbott knowingly produced formula purchased via taxpayer-funded programs (such as WIC and Medicaid) in environments posing unacceptable contamination risks from dangerous microorganisms.

* Unaddressed Facility Leaks: Roof leaks at the Sturgis, Michigan plant regularly resulted in water dripping over manufacturing equipment. Rather than repairing root causes, management used makeshift solutions such as "roof leak umbrellas" in processing areas.

* Compromised Equipment: Abbott allegedly continued operating liquid-to-powder spray dryers despite documenting cracks and pits that fostered bacteria.

* Testing Concealment: The suit alleged Abbott intentionally curtailed bacterial testing to avoid positive results and concealed internal positive contamination findings from U.S. Food and Drug Administration (FDA) inspectors during 2019 and 2022 inspections.

Litigation Background

* Originating from a 2022 whistleblower lawsuit filed in the U.S. District Court for the Western District of Michigan, the matter was coordinated between the DOJ Civil Division Commercial Litigation Branch, the U.S. Attorney’s Office for the Western District of Michigan, and the National Association of Medicaid Fraud Control Units (NAMFCU).

The complete announcement and press contacts can be accessed directly on the Maryland Attorney General Press Release.