Criminal Probe Of Abbott Labs Over Recalled Baby Formula Underway At DOJ

NORTH CHICAGO, IL — The U.S. Department of Justice is conducting a criminal investigation into Abbott Laboratories handling of its troubled infant formula plant in Michigan that triggered a nationwide shortage last year when production there was halted for safety reasons. The federal probe is being conducted by DOJ's Consumer Protection Branch.

A year ago, inspectors with the Food and Drug Administration found Cronobacter sakazakii bacteria at the plant after the federal regulators began investigating four bacterial infections among infants who had consumed formula from the plan.

Two of the infants died, although the company said there is no evidence linking its products to the infections.

According to testimony from the head of the FDA, conditions at the plant were "egregiously unsanitary" before it was ordered shut down in February. Inspectors reported finding standing water, a leaking roof, cracks in equipment that could lead to bacterial contamination and Cronobacter bacteria growing in multiple locations.

In May, Abbott entered into a consent decree with Consumer Protection Branch attorneys, and CEO Robert Ford apologized for the company's actions, which contributed to a nationwide shortage of powdered infant formula that lasted for months after production resumed in June.

Related: Parents File Class Actions Over Abbott's Recalled Baby Formula

Company officials said they are fully cooperating with the investigation, the existence of which was first reported Friday by the Wall Street Journal.

Abbott and three other companies produce about 90 percent of baby formula sold in the country, and the Sturgis factory is the only source for several specialty formulas. Due to high tariffs and provisions in trade agreements, only 2 percent of baby formula is imported from other countries.

Last week, an Abbott Labs shareholder filed suit against company leaders alleging that they "either knew or should have known that of the health and safety issues at the Sturgis facility, the danger posed by the contaminated infant formula, and the false and misleading statements were material, paramount to the Company's stock price and issued on the Company's behalf and took no steps in a good faith effort to prevent or remedy that situation."

Company executives and directors approved or permitted the alleged wrongdoing, and "participated in efforts to conceal or disguise those wrongs from the Company's stockholders or recklessly and/or with gross negligence disregarded the wrongs complained of herein," according to Larry Hutteman's complaint.

Abbott also faces dozens more lawsuits from consumers, including proposed class actions seeking damages related to its baby formulas.

Related: FDA Chief Testifies About Abbott Labs Recall, Unsanitary Conditions