Abbott Laboratories has agreed to pay $384,999,040, or about $384.9 million, to resolve federal and state allegations that it caused government programs to pay for powder infant formula and nutritional therapy products made in plants that did not meet safety requirements. The Justice Department announced the settlement on September 14, and Tennessee Attorney General Jonathan Skrmetti said on September 18 that his state will receive $2.35 million of it. The money flows to the federal government and 40 participating states, not to individual formula buyers, and no consumer claim process has been announced.
How the $384.9 Million Is Divided
According to the Justice Department’s announcement, Abbott will pay $348,700,868 to the United States to resolve False Claims Act allegations and an additional $36,298,172 to certain states for claims involving their Medicaid and WIC programs. WIC, the Special Supplemental Nutrition Program for Women, Infants, and Children, is funded and regulated by the U.S. Department of Agriculture and provides infant formula and other nutritional support to eligible participants. The department says more than half of all infant formula bought in the United States is paid for with USDA funds through WIC, and state Medicaid programs also cover certain formula products.
That structure explains who is being repaid. The government’s theory is that taxpayer-funded programs bought products that did not meet the statutory, regulatory and contractual standards they were supposed to meet. The recovery therefore goes back to those programs. It is not calculated from what any family spent at a store, and it does not come with a refund form for households that bought formula with their own money.
Part of the federal share also goes to the people who first raised the alarm. The case began as a whistleblower suit under the False Claims Act’s qui tam provisions, which let private individuals sue on behalf of the government and share in any recovery. The relators, former Abbott employees Scott Millard, Kristine Cooper and Loren Cooper, will receive $69 million, the Justice Department said.
Coverage and cost, tracked separately. A government recovery over nutrition products is a reminder that what a public program pays and what a household pays out of pocket are tracked in different places. Keeping medications, supplies and costs on one list is what the tracker in The Medicare Cost & Coverage Protection Kit is built for.
What the Government Alleged at the Sturgis Plant
The settlement covers the period from January 1, 2018, through December 31, 2022, at Abbott facilities in Sturgis, Michigan, and Casa Grande, Arizona. The Sturgis plant is the same facility at the center of the 2022 formula recall and shutdown that contributed to a nationwide shortage. On November 13, 2025, the United States filed a complaint in intervention alleging that Abbott caused government programs to buy powder infant formula made at Sturgis in an environment that put products at unacceptable risk of microorganism contamination.
The complaint’s details are specific. The Justice Department said roof leaks were common at Sturgis, with water running and dripping over equipment, and that Abbott relied on temporary fixes such as roof-leak umbrellas rather than addressing root causes. It alleged that Abbott kept running spray dryers, where liquid formula is turned into powder, after documenting cracks and pits in them, and that it lengthened the number of batches run between cleaning cycles to increase production. The government also alleged that Abbott in some instances did not disclose contamination test results when the Food and Drug Administration requested them during 2019 and 2022 inspections.
“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. U.S. Attorney Timothy VerHey of the Western District of Michigan, where the case was filed, said the resolution shows the government’s commitment to holding manufacturers accountable when it pays for noncompliant products. The Justice Department noted that the claims resolved by the settlement are allegations only and that there has been no determination of liability.
Tennessee’s $2.35 Million Share and the Multistate Team
The Tennessee Attorney General’s Office said the state will recover $2,349,346.04 from the settlement. Tennessee joined 39 other states and the federal government in the resolution, and it was one of 11 states on a National Association of Medicaid Fraud Control Units team that took part in the investigation and negotiations. The others were California, Connecticut, Colorado, Florida, Maryland, Massachusetts, Michigan, New York, Ohio and Oregon.
“Parents across Tennessee have to know with absolute certainty that the food they buy for their babies is safe,” Skrmetti said in the announcement. His office tied the state’s recovery to Medicaid and WIC, the same programs the Justice Department named. Tennessee’s share is its allocation of the roughly $36.3 million state portion, which is why it is a small fraction of the national total.
State Medicaid fraud control units handle cases like this one because Medicaid is jointly funded by states and the federal government. When a product billed to Medicaid is found, or alleged, not to meet the required standards, both levels of government can seek repayment. A multistate team lets a handful of states negotiate for the rest, and each participating state then receives a share based on its own program claims.
What the Settlement Means for Families and Taxpayers
For households, the most practical point is what the settlement does not do. Neither the Justice Department nor Tennessee announced a claims administrator, a filing website, an eligibility period for purchasers, or a payment schedule for individuals. Any message that promises a personal share of the Abbott formula settlement in exchange for a fee, bank login or personal information does not match the announced terms, which send money only to governments and the whistleblowers.
The settlement also does not change what is on store shelves today. It resolves civil claims about past manufacturing conditions; it is not a new recall and does not include product lot numbers or feeding guidance. Questions about a specific product belong with a pediatrician and with the FDA’s recall notices.
For older Americans, the case has a quieter money angle. Grandparents who help buy formula will not see a refund, but as taxpayers they help fund WIC and Medicaid, and the settlement reaches nutritional therapy products as well as infant formula. The recovery returns money to the programs that paid for products the government says did not meet required standards, which is how the False Claims Act is designed to protect public health spending.
The Justice Department said the case was handled by its Civil Division’s Civil Fraud Section and the U.S. Attorney’s Office for the Western District of Michigan, with help from the USDA Office of Inspector General. The case is captioned United States, et al., ex rel. Scott Millard, et al., v. Abbott Laboratories, No. 1:22-cv-994.
When Health Costs Run Through More Than One Program
The Abbott case shows how a single product can be paid for by WIC, Medicaid or a household budget, each with its own rules. For older adults on Medicare, the same split shows up between plan coverage, drug costs and what gets paid at the counter.
The Medicare Cost & Coverage Protection Kit includes 51 state Medicare cost-help packs, a medication and cost tracker, and the prior-authorization appeal steps for a coverage denial.
Start the medication list in The Medicare Cost & Coverage Protection Kit.
This article was prepared with AI assistance and reviewed against the linked official sources.
