Attorney General Jeff Jackson Reaches $384 Million Settlement Over Contaminated Baby Formula That Caused Supply Shortage
North Carolina will receive more than $216,000
FOR IMMEDIATE RELEASE
Monday, Sept. 21, 2026
Contact: comms@ncdoj.gov
919-538-2809
RALEIGH – Attorney General Jeff Jackson, along with 39 other bipartisan states and the federal government, reached a $384 million settlement with Abbott Laboratories to settle Medicaid fraud allegations arising from the company making, selling, and then recalling contaminated baby formula that contributed to the nationwide formula shortage in 2022. North Carolina will receive $216,593.82 in restitution and recoveries.
“No parent ever wants to give their child something that could be dangerous for their health,” said Attorney General Jeff Jackson. “When parents bought baby formula, they were trusting that the manufacturer was taking every precaution to make sure that product was safe for their child. Abbott failed to meet that standard here, and parents and taxpayers suffered. I’m pleased that this money is going back to our Medicaid and food assistance programs so it can be spent on food and formula that will help families.”
More than half of all infant formula purchased in the United States is paid for by funds from state Medicaid programs and the federal Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) program.
Abbott makes more than 40% of all formula sold in the United States, including Similac. In 2022, Abbott was forced to recall several baby formula products that were made in certain facilities because of a potential link to bacterial contamination. That recall worsened an ongoing nationwide baby formula shortage that led to parents struggling to find and buy formula to feed their infants. Pharmacies and grocery stores had to start rationing baby formula sales, and scammers began selling fraudulent formula.
In their lawsuit, the states and the federal government alleged that Abbott knowingly sold baby formula to the states and the federal government that had an unacceptably high risk of contamination. The company knew the contamination risk was high because it was allegedly failing to properly maintain equipment and monitor and control areas of water that could lead to contamination in some of its production facilities. When certain test results indicated the possibility of microorganism contamination, Abbott didn’t disclose those results to the Food and Drug Administration (FDA).
About the Medicaid Investigations Division (MID)
The Attorney General’s MID investigates fraud and abuse by healthcare companies and providers, as well as patient abuse and neglect in facilities that are funded by Medicaid. MID is North Carolina’s Medicaid Fraud Control Unit, the unit required by federal law to ensure taxpayer dollars in the Medicaid program go to fund patient care, not fraud. MID investigates and prosecutes Medicaid provider fraud and patient abuse. Medicaid is a joint federal-state program that helps provide medical care for people with limited income. To date, the MID has recovered more than $1.2 billion in restitution and penalties for North Carolina. MID has won more than $41 million in civil penalties since 2012 that go to fund North Carolina’s public schools.
MID receives 75% of its funding from the U.S. Department of Health and Human Services under a grant award totaling $8,561,152 for Federal fiscal year (FY) 2026. The remaining 25%, totaling $2,853,714, is funded by the State of North Carolina. To report Medicaid fraud in North Carolina, call the North Carolina Medicaid Investigations Division at 919-881-2320, or report Medicaid provider fraud online here or patient abuse online here.
The North Carolina Department of Health and Human Services and the county Departments of Social Services are the agencies responsible for Medicaid recipient fraud. You can report Medicaid recipient fraud here.
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