In mid-September, the U.S. Department of Justice (DOJ) announced that Abbott Laboratories will pay nearly $385 million to resolve allegations that it caused false claims to be submitted to federal and state programs.
The specific allegations, which initially were brought by three whistleblowers, are that Abbott failed to manufacture powdered infant formula at its Sturgis, Michigan, and Casa Grande, Arizona facilities in compliance with federal, state, and contractual requirements.
Why is that a False Claims Act case? Because more than half of all infant formula purchased in the United States is paid for with U.S. Department of Agriculture funds through the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) program, which provides nutritional support to eligible participants. State Medicaid programs also cover and pay for certain infant formula. When a manufacturer delivers to the government a product that does not meet regulatory and contractual standards, that becomes a false claim on the taxpayer.
Of the settlement, about $348.7 million goes to the federal government, and about $36.3 million goes to state Medicaid programs. In settling the case, Abbott did not admit liability and maintains there is no evidence its formula caused illnesses behind a 2022 recall of its product.
Nevertheless, the allegations are striking. According to the whistleblowers’ qui tam complaint and the DOJ complaint, roof leaks were common at the Sturgis plant, and...
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