NC reaches settlement with Abbott over contaminated baby formula that led to 2022 shortage, tell me about this news in (https://www.wral.com/news/state/settlement-baby-formula-medicaid-fraud-contamination-september-2026/)

In September 2026, North Carolina joined the federal government and 39 other states in reaching a major $384 million settlement with Abbott Laboratories. The agreement resolves allegations under the False Claims Act and state Medicaid fraud statutes related to the manufacturing, sale, and subsequent recall of contaminated infant formula.

Key Details of the Settlement

• The Allegations: State and federal authorities alleged that Abbott knowingly sold baby formula to government programsincluding Medicaid and the Women, Infants, and Children (WIC) nutrition programthat posed an unacceptably high risk of bacterial/microorganism contamination. Investigators pointed to poorly maintained equipment, uncontrolled moisture/water issues in production facilities (notably the Sturgis, Michigan plant), and a failure to disclose certain positive contamination test results to the FDA.

• The 2022 Crisis: The issues at Abbott’s facilities triggered a massive nationwide recall in early 2022 and the temporary shutdown of its primary plant, sparking an unprecedented nationwide baby formula shortage, rationing, and price gouging.

• Financial Distribution: Of the overall settlement amount (approximately $384–$385 million), the vast majority goes to the federal government (around $348.7 million), with approximately $35.5 million distributed among participating state Medicaid programs. From this pool, North Carolina is set to receive over $216,000 ($216,593.82) in restitution and recoveries.

• Whistleblower Involvement: The case originated as a qui tam (whistleblower) lawsuit brought forward in 2022 by former Abbott employees who alerted regulators to safety issues at the company’s manufacturing plants.

• Abbott’s Position: As is standard in civil False Claims Act resolutions, the settlement resolves the disputed claims without an admission of fault or liability by Abbott Laboratories. Abbott has maintained that subsequent government tests on unopened formula showed no direct link to the infant illnesses investigated.