Abbott Laboratories will pay more than $384 million to the federal government and a coalition of states to settle claims involving potentially unsafe baby formula, including more than $9.3 million connected to New York’s Medicaid program. New York Gets $9.3M in Abbott Formula Settlement
New York Attorney General Letitia James announced the agreement Thursday, Sept. 17. Her office helped lead the coalition of 40 attorneys general that sued Abbott in 2025.
The case alleged that Abbott failed to maintain proper safety conditions at formula plants from January 2018 through December 2022 and misled inspectors about product quality. Abbott’s payment resolves the claims without the allegations being tested at trial.
How the settlement is divided
Under the agreement, Abbott will pay $348,700,868 to the federal government and $35,491,288 to participating states. More than $9.3 million is assigned to the New York State Medicaid Program, with $5.3 million going directly to the state.
The public programs involved include Medicaid and the Special Supplemental Nutrition Program for Women, Infants, and Children, known as WIC. Both programs paid for infant formula and nutritional products during the period covered by the lawsuit.
The states alleged that public money was used to purchase products that did not meet required safety standards. The official settlement document provides the legal terms.
Allegations involving manufacturing safety
The lawsuit focused on Abbott facilities in Sturgis, Michigan, and Casa Grande, Arizona. It alleged that equipment was not properly maintained and that water was not adequately controlled, increasing the risk of microorganism contamination.
Investigators also alleged that Abbott did not disclose certain contamination test results when responding to requests from the U.S. Food and Drug Administration.
These are allegations resolved through a settlement. The announcement does not say that every product made during the period was contaminated or that every child who used Abbott formula was harmed.
The 2022 recall and shortage
Abbott closed its Sturgis plant and recalled formula in 2022. The disruption contributed to a nationwide shortage that left parents searching for suitable products and placed additional pressure on families using WIC.
The episode showed how dependent the infant-formula market had become on a small number of manufacturers. When a major plant stopped production, the effects reached stores and households across the country, including Central New York.
Families with infants cannot simply replace formula with ordinary milk or homemade mixtures. Parents should follow medical advice and current federal guidance when choosing or changing formula.
Why the agreement matters in New York
The settlement combines product safety with protection of public funds. Medicaid and WIC serve residents in every part of New York, including Oneida and Herkimer counties. When products purchased through those programs fail to meet requirements, the cost is carried by families and taxpayers.
James said parents should not have to fear that formula may be contaminated. She accused Abbott of putting profits before people and said her office would pursue companies that place families at risk.
The money does not erase the stress caused by the recall or shortage. It does, however, return funds to government programs and creates financial accountability for the conduct alleged in the case.
What families should do
The release concerns past conduct and a legal settlement. It is not a new recall notice. Parents should not discard current formula solely because of this announcement.
Anyone concerned about a product should check its lot number against current FDA recall notices and speak with a pediatrician or qualified health professional. Families using WIC can also contact their local program office for approved alternatives and feeding guidance.
Suspected Medicaid fraud can be reported to the Attorney General’s Medicaid Fraud Control Unit. Immediate health concerns should be directed to a medical professional or emergency service.
The settlement sends a broader message to manufacturers that safety records, honest reporting and the proper use of public health funds are not optional. For New York families, the central issue remains simple: infant nutrition products must be made and sold with the highest level of care.
