One of America’s biggest baby formula makers will pay nearly $385 million after the government said it broke safety rules meant to stop deadly bacteria from reaching infants.
Story Snapshot
- Abbott Laboratories agreed to pay almost $385 million to settle a civil case with the Justice Department and several states.
- The case centers on Cronobacter bacteria found at Abbott’s Sturgis, Michigan, formula plant.
- The 2022 plant shutdown triggered a nationwide baby formula shortage.
- The Justice Department had already closed a separate criminal probe into the plant before reaching this civil deal.
- Abbott says no formula it shipped to stores ever tested positive for the bacteria.
What Abbott Agreed to Pay
Abbott Laboratories will pay close to $385 million to settle a civil False Claims Act case brought by the Justice Department and a group of states. The case grew out of a Cronobacter sakazakii bacteria problem at Abbott’s powdered infant formula plant in Sturgis, Michigan. The government said Abbott made formula there without following federal rules meant to keep the product free of dangerous germs.
Origins of the Federal Case
The Justice Department first filed a complaint in May 2022, claiming Abbott and named managers ran the Sturgis plant “under conditions and using practices that failed to comply with regulations designed to ensure the quality and safety of infant formula”. That complaint came with a consent decree letting Abbott restart production only under strict federal oversight, including outside experts checking the facility’s compliance.
Shortage Followed the Shutdown
The Sturgis plant’s closure in early 2022 helped set off a nationwide baby formula shortage, since it was one of the country’s largest formula factories. Parents struggled to find supplies for months while Abbott worked to reopen the site under the new federal requirements. The plant is now covered by the same consent decree tied to this week’s settlement.
The current civil settlement covers claims that Abbott knowingly sold formula made under unsafe conditions through programs funded by taxpayers, including federal nutrition assistance for low-income families. Abbott’s stock ticked up slightly after the settlement was announced, rising about 1.2% in midday trading.
Criminal Probe Closed Before Civil Deal
Before this settlement, the Justice Department closed a separate criminal investigation into the same plant. A department spokesperson said “civil and criminal options are on the table” but that officials chose the civil path this time. Reporting from the Wall Street Journal said the criminal probe had gathered a large amount of evidence before top officials decided to close it and instead recover money Abbott earned selling formula through government nutrition programs.
Democratic Representative Adam Schiff opened an inquiry into why the criminal case was dropped. A senior Justice Department official told CBS News the department believed a civil resolution under the False Claims Act was the better outcome. That decision, made without public detail at the time, is now folded into the broader settlement announced this week.
Abbott’s Position on the Bacteria
Abbott has repeatedly said no unopened, distributed formula from the plant ever tested positive for Cronobacter sakazakii. The company points to Food and Drug Administration testing on unopened containers from affected homes in March 2022, which came back negative, and says the Centers for Disease Control and Prevention later found no definitive link between the Sturgis facility and the illness cases under review. This settlement resolves civil allegations and does not represent a criminal conviction.
Abbott agrees to settlement over closure of largest baby formula plant in the US https://t.co/UbzHFySN3s
— O.C. Register (@ocregister) September 14, 2026
Part of a Wider Pattern
This is not Abbott’s only major formula payout. The company separately agreed to pay $670 million to resolve lawsuits over its specialty formulas for premature infants, following a Missouri jury verdict of $495 million in one case [7 was WSJ, using different source]. Abbott also settled shareholder claims tied to the 2022 recall by committing $40 million over five years to upgrade the Michigan plant. Regulators often lean on consent decrees and settlements like these to force manufacturing changes when contamination risk is serious, even without a full criminal trial.
Sources:
cbsnews.com, justice.gov, static.blbglaw.com, news.bloomberglaw.com, images.law.com
