Abbott Labs to pay $384M+ to settle formula safety allegations
The settlement with 40 states and the federal government resolves allegations Abbott defrauded Medicaid and other programs by selling products from plants that failed to meet safety standards.
Abbott Laboratories will pay approximately $384.2 million to resolve a whistleblower lawsuit alleging it defrauded government health programs. The settlement includes $348.7 million for the United States to resolve False Claims Act allegations and $35.5 million for 40 states to resolve claims related to their Medicaid programs. The lawsuit, originally filed in 2022, alleged that between 2018 and 2022, Abbott knowingly sold infant formula and nutritional products that were manufactured in facilities failing to meet federal and state safety and quality standards designed to prevent contamination.
This enforcement action highlights the significant financial and reputational risks for government contractors, particularly in regulated sectors like food and healthcare, that fail to comply with contractual and regulatory quality requirements. The case demonstrates the powerful combination of a whistleblower lawsuit under the qui tam provisions of the False Claims Act with coordinated enforcement by the Department of Justice and a large coalition of state attorneys general. Counsel for manufacturers should note the specific allegations of manipulated safety testing and ensure clients have robust, verifiable compliance programs to mitigate similar risks.