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Company Allegedly Sold Products Manufactured in Unsanitary Conditions at Michigan and Arizona Plants and Engaged in Alleged Cover-Up
BALTIMORE, MD – Attorney General Anthony G. Brown today joined 39 other states and the federal government to reach an agreement with Abbott Laboratories (Abbott) to settle allegations that the company defrauded government health programs by selling them infant formula and nutritional therapy products manufactured in plants that failed to meet state and federal safety standards for preventing contamination. Abbott, an Illinois-based healthcare company, will pay about $348.7 million to the United States to resolve False Claims Act allegations and another $35.5 million to the states for claims related to Medicaid programs.
Maryland was one of five states to directly intervene in this lawsuit and will recover more than $3 million in the settlement.
“Parents trust that the infant formula they feed their babies is safe, and Abbott betrayed that trust for their own profit,” said Attorney General Brown. “This settlement holds Abbott accountable for knowingly manufacturing formula in substandard conditions and defrauding programs that Maryland families rely on.”
The national 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 that 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, as described in the lawsuit, roof leaks frequently occurred in the Sturgis plant, leading to water running and dripping over equipment. Water can be a breeding ground for dangerous microorganisms. Rather than permanently addressing the root causes, Abbott used temporary solutions, such as roof leak umbrellas, to try to divert leaks in product processing areas even though Abbott corporate leadership understood that the wet environment put the products at increased risk for contamination. Similarly, the lawsuit alleged that Abbott continued to run spray dryers, where liquid formula was transformed into a dry powder, even after Abbott documented cracks and pits in the dryers, which also increased the risk of contamination.
Further, the lawsuit alleged that Abbott intentionally curtailed bacterial growth testing in order to avoid obtaining positive test results showing contamination, and that, in certain instances, when testing did show contamination, Abbott failed to disclose the test results to the U.S. Food and Drug Administration during 2019 and 2022 inspections at the Sturgis facility.
This settlement arises out of a whistleblower lawsuit initially filed in 2022 in the United States District Court for the Western District of Michigan. On November 13, 2025, the United States filed a Complaint in Intervention alleging that Abbott caused federal WIC programs to purchase powder infant formula manufactured at the Sturgis facility despite the products’ failure to meet statutory, regulatory, and contractual requirements. On December 1, 2025, Maryland and four other states, California, Connecticut, Massachusetts, and Tennessee, also filed an intervention complaint. These states litigated the case against Abbott while a larger group of states, which had purchased Abbott’s products, negotiated a settlement.
In making today’s announcement, Attorney General Brown thanked Medicaid Fraud and Vulnerable Victims Unit Director Zak Shirley as well as Assistant Attorney General Raja Mishra for their work on the case. This case was resolved through a coordinated effort between state and federal partners, including the Justice Department’s Civil Division Commercial Litigation Branch and the U.S. Attorney’s Office for the Western District of Michigan. A National Association of Medicaid Fraud Control Units (NAMFCU) Team participated in the investigation and conducted settlement negotiations with Abbott on behalf of the states.
The Maryland Office of the Attorney General, Medicaid Fraud and Vulnerable Victims Unit receives 75 percent of its funding from the U.S. Department of Health and Human Services under a grant award totaling $7,119,096 for Federal fiscal year (FY) 2026. The remaining 25 percent, totaling $2,373,032 for FY 2026, is funded by the State of Maryland.
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