New York will receive more than $9.3 million from a nationwide settlement resolving claims that Abbott Laboratories sold potentially contaminated baby formula purchased through Medicaid and federal nutrition programs.
The baby formula manufacturer will pay more than $384 million to the federal government and 40 states, New York Attorney General Letitia James announced Thursday. The settlement follows a 2025 lawsuit alleging Abbott failed to maintain adequate safety standards and misled inspectors about manufacturing conditions.
The settlement resolves allegations covering formula produced from Jan. 1, 2018, through Dec. 31, 2022.
Settlement divides money between federal and state programs
Abbott will pay $348,700,868 to the federal government and $35,491,288 to participating states under the agreement with the attorneys general and the U.S. Department of Justice.
More than $9.3 million will be directed to the New York State Medicaid Program. Of that amount, $5.3 million will go directly to the state, according to the attorney general's office.
The case involved formula purchased with Medicaid funds and through the Special Supplemental Nutrition Program for Women, Infants and Children, commonly known as WIC. Those programs require products bought with public funds to comply with applicable safety standards.
James and attorneys general from California, Connecticut, Colorado, Florida, Maryland, Massachusetts, Michigan, Ohio, Oregon and Tennessee led the multistate settlement. Attorneys general from 29 other states also joined the agreement.
Lawsuit focused on manufacturing and inspection claims
The lawsuit alleged Abbott's facilities in Sturgis, Michigan, and Casa Grande, Arizona, produced formula under conditions that created a high risk of contamination during the four-year period.
State officials accused the company of failing to maintain manufacturing equipment and control water in its facilities, increasing the potential for microorganisms to contaminate products. The lawsuit also alleged Abbott did not disclose some test results indicating contamination when responding to requests from the U.S. Food and Drug Administration.
The states said those practices caused Medicaid and WIC funds to be spent on infant formula and nutritional products that did not satisfy program safety requirements.
Abbott closed its Sturgis facility and recalled formula products in 2022. The shutdown and recall contributed to a nationwide baby formula shortage, according to the attorney general's office.
James said the case was intended to recover public money and hold manufacturers accountable for the safety of products used by infants and families. New York's Medicaid Fraud Control Unit conducted the state's investigation and handled the settlement.
The unit accepts confidential reports about suspected Medicaid provider fraud through the attorney general's website or its hotline at 800-771-7755. Emergencies should be reported to 911.
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