Baby formula maker Abbott Laboratories agreed to pay nearly $385 million to resolve a civil False Claims Act case with the Justice Department and some states stemming from a Cronobacter bacterial contamination at one of its plants in Michigan that manufactures powdered baby formula, the department announced on Monday.
Earlier this year, the Justice Department ordered federal prosecutors to close a parallel criminal investigation, CBS News previously reported.
Federal prosecutors originally tried to pursue felony charges and had the support of Tysen Duva, the assistant attorney general of the Justice Department’s Criminal Division, but senior DOJ leadership would not allow the case to proceed.
A senior DOJ official told CBS News in February that the department felt that a civil False Claims Act resolution was “the best mechanism to achieve accountability, deterrence and protection of the public” in the matter.
The civil False Claims Act case alleged that the company caused government programs to purchase powdered infant formula alleged by the government to have been made “in an environment that put the products at unacceptable risk of microorganism contamination and significantly impacted the products’ reliability, quality, and safety.”
“No company should be gambling on the health and safety of our nation’s infants by allowing unsanitary conditions to persist at a facility manufacturing baby formula,” said Associate Attorney General Stanley Woodward in a statement.
The company said the settlement with the government “does not represent any finding of fault or liability,” according to a statement.
“As the government has previously indicated, it has closed its criminal investigation on this matter,” the company said, adding that tests conducted by government regulators of unopened formula products from the homes of the infants under investigation at the time of the 2022 recall were negative for Cronobacter sakazakii.
The decision to pursue a civil settlement with Abbott Labs and close the parallel criminal case marks one example in a string of corporate cases involving public health and safety under the federal Food, Drug and Cosmetic Act that have been softened, dismissed or lost support from senior Justice Department leaders in recent months, CBS previously reported.
Earlier this year, the Justice Department allowed Alibaba to enter into a nonprosecution agreement and pay $600 million, even though prosecutors on the case believed they had evidence the company was liable for felonies by failing to prevent dangerous drugs, chemicals and pill presses from being sold to American customers over an eight-year period.
In July, California Senator Adam Schiff launched a congressional inquiry into the closure of the Abbott Labs criminal case.
“If prosecuting cases involving the risk of injuries or death to premature infants are not a priority enforcement matter, I have questions about what priorities the DOJ considers worthy of pursuing,” Schiff wrote in a letter to Attorney General Todd Blanche.
In 2022, Abbott Laboratories recalled several of its popular powdered formula brands, including Similac, after consumers complained about infant illness related to products from Abbott Nutrition, in Sturgis, Michigan.
The Justice Department said the company had failed to take steps to fix roof leaks, resorting instead to “temporary solutions” that still left its products at risk for microorganism contamination.
The department also said that the company “intentionally did not test for bacterial growth to avoid obtaining positive test results showing contamination” and that in some cases where testing showed evidence of micro contamination, it failed to disclose those results to the Food and Drug Administration during inspections in 2019 and 2022.
