Federal officials announced this week that a Fortune 500 healthcare devices and medical supplies company has agreed to pay just shy of $385 million to resolve allegations involving issues with its production of baby formula.
The case stemmed from a November 2025 complaint alleging that Abbott Laboratories had caused federal government programs to purchase powder infant formula manufactured at the company’s Sturgis, MI facility – the largest of its kind in the country – despite the products’ failure to meet statutory, regulatory, and contractual requirements, creating what officials called an “unacceptable risk of microorganism contamination” that “significantly impacted the products’ reliability, quality, and safety.”
“Today’s settlement is a victory for American families and makes clear the safety of our children is not negotiable,” Acting Deputy Attorney General Trent McCotter said in a statement. “Abbott will pay a substantial sum to resolve serious allegations it violated federal health and safety requirements designed to protect babies. The Justice Department will act decisively against anyone who puts American families at risk and ensure misconduct carries serious consequences.”
“No company should be gambling on the health and safety of our Nation’s infants by allowing unsanitary conditions to persist at a facility manufacturing baby formula,” Associate Attorney General Stanley E. Woodward, Jr. added. “The Department will hold accountable bad actors that knowingly misrepresent compliance with essential health and safety standards designed to protect American families.”
The U.S. Department of Agriculture (USDA) funds and regulates the Special Supplemental Nutrition Program for Women, Infants, and Children (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, and state Medicaid Programs also cover and pay for certain types of infant formula.
Abbott, headquartered in a Chicago suburb, employs more than 100,000 workers, generates nearly $45 billion in annual revenue, and is often lauded for its innovation, diversity, and workplace environment. But the allegations painted another picture entirely.
Roof leaks were “a common occurrence” in the Sturgis plant, leading to water running and dripping over equipment, according to a news release announcing the settlement. Rather than permanently addressing the root causes, officials said, Abbott used temporary solutions, such as 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 of microorganism contamination. Similarly, the complaint alleged that Abbott continued to run spray dryers, whereby 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, particularly in the presence of moisture.
Officials alleged that Abbott made its spray dryer conditions worse by lengthening the number of product batches that passed through the dryers between cleaning cycles, enabling increased production. It was also alleged that Abbott intentionally did not test for bacterial growth to avoid obtaining positive test results showing contamination, and that in certain instances where contamination was definitively found, Abbott failed to disclose the test results when responding to requests from the Food and Drug Administration (FDA) during 2019 and 2022 inspections.
It wasn’t the first time the company showed up in a DOJ press release. In 2001, TAP Pharmaceutical Products, a subsidiary of Abbott, settled charges related to Medicare fraud and illegal marketing tactics of the drug leuprorelin, a synthetic hormone with a wide array of uses. The settlement in that case was $875 million, at the time a record high, although it has been surpassed five times since, with a series of $1 billion-plus settlements from 2009 to 2013.
“Parents rely on companies like Abbott Laboratories to responsibly follow the rules and ensure their products – especially baby formula – are safe. USDA OIG (Office of Inspector General) remains vigilant against those that would compromise public health and safety by failing to comply with legal standards and put infants at risk,” USDA Inspector General John Walk said. “This behavior is inexcusable and will not be condoned.”
