Abbott to Pay $385 Million to Settle Baby Formula Recall Claims

Abbott Laboratories has agreed to pay approximately $385 million to settle federal and state civil claims stemming from the 2022 recall of its baby formula and the subsequent nationwide shortage. The settlement resolves a lawsuit alleging the company submitted false claims to government programs for formula produced in facilities that failed to meet safety requirements. Under the agreement, Abbott will pay $348.7 million to the federal government and $36.3 million to state Medicaid and WIC programs. The case originated from a whistleblower lawsuit filed under the False Claims Act by three former Abbott employees, who will collectively receive $69 million from the federal recovery. The Justice Department's complaint detailed a pattern of substandard conditions at Abbott's Sturgis, Michigan, plant, the largest baby formula factory in the country. Government prosecutors alleged the company relied on temporary "roof leak umbrellas" instead of permanent fixes for recurring leaks and continued operating cracked spray dryers, creating contamination risks.