AG Rayfield: Abbott to Pay Over $384 Million After Selling Taxpayer-Funded Programs Baby Formula Made in Unsafe Conditions

Attorney General Dan Rayfield announced today that Abbott Laboratories will pay Oregon $977,558, resolving allegations that it sold powder infant formula and nutritional therapy products made in unsafe manufacturing conditions to federal and state programs, including Medicaid and food assistance programs. Families rely on those programs to provide safe, reliable formula for their babies, and AG Rayfield said Abbott's conduct put that trust -and infants' health - at risk. The settlement is part of the ongoing work of the Oregon DOJ's Medicaid Fraud Unit, which investigates and prosecutes fraud on this essential taxpayer-funded program.

"As a parent, few things are more frightening that the possibility that our kids' food is unsafe, " said Attorney General Rayfield. "We trust that everyone who touched these products are doing their jobs and following safety standards. Abbott Laboratories broke that trust and used taxpayer dollars to do it. We will hold companies accountable when they put people - in this case babies - at risk."

The U.S. Department of Agriculture funds and regulates WIC, the Special Supplemental Nutrition Program for Women, Infants, and Children, which covers infant formula for eligible families. WIC funds pay for more than half of all infant formula purchased in the United States, and many state Medicaid programs, including Oregon's, also cover powder infant formula.

As alleged in the federal complaint, investigators found that between January 2018 and December 2022, Abbott manufactured powder infant formula and nutritional therapy products at its Sturgis, Michigan, and Casa Grande, Arizona, facilities without meeting federal and state safety requirements. Abbott failed to maintain its manufacturing equipment and failed to control water in the facilities, allegedly creating conditions that put products at increased risk of microorganism contamination. During FDA inspections in 2019 and 2022, Abbott also withheld test results showing that contamination was present at the Sturgis facility, according to the settlement. As a result, WIC and state Medicaid programs paid for formula and nutritional products that did not meet the safety standards Abbott had promised to follow.

Under the settlement, Abbott will pay $348,700,868 to the federal government and $35,491,288 to 39 states for claims tied to their Medicaid programs. A team from the National Association of Medicaid Fraud Control Units investigated the case and negotiated the settlement on behalf of the states, with representatives from Oregon, California, Connecticut, Colorado, Florida, Maryland, Massachusetts, Michigan, New York, Ohio, and Tennessee.

About the MFCU

The MFCU is responsible for investigating and prosecuting billing fraud committed by Medicaid providers and abuse/neglect committed by health care providers in connection with the provision of health care services.

The MFCU receives 75% of its funding from the U.S. Department of Health and Human Services under a grant award totaling $6,539,396 for October 2025 through September 2026. The remaining 25%, totaling $1,634,848, is funded by the State of Oregon.

Report fraud, abuse & neglect

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