Violation Tracker Individual Record

Company: 
Abbott Laboratories and CG Nutritionals
Current Parent Company: 
Abbott Laboratories
Penalty: 
$600,000,000
Year: 
2003
Date: 
October 27, 2003
Offense Group: 
government-contracting-related offenses
Primary Offense: 
False Claims Act and related
Secondary Offense: 
kickbacks and bribery
Violation Description: 

Abbott Laboratories and two of its units agreed to pay a total of $600 million in the first combined civil settlement and criminal conviction arising from Operation Headwaters, an undercover investigation by the Federal Bureau of Investigation, the U.S. Postal Inspection Service and the Office of the Inspector General for HHS, in which federal agents created a fictitious medical supplier known as Southern Medical Distributors. During its operation, various manufacturers, including Abbott's Ross Products Division, offered kickbacks to undercover agents to purchase the manufacturers' products and then advised them how to fraudulently bill the government for those items. In addition to a $382 million in civil federal Medicare and Medicaid recoveries, the states recovered $18 million in state Medicaid funds in connection with the federal government's claims. Abbott subsidiary C G Nutritionals also paid $200 million in criminal fines.

Level of Government: 
federal
Action Type: 
agency action
Agency: 
Justice Department Civil Division
Civil or Criminal Case: 
civil and criminal
HQ Country of Parent: 
USA
HQ State of Parent: 
Illinois
Ownership Structure of Parent: 
publicly traded
Major Industry of Parent: 
pharmaceuticals
Specific Industry of Parent: 
pharmaceuticals
Source Notes: 
If an online information source is not working, check the Violation Tracker Data Sources page for an updated link.
Parent company note: 
Parent-subsidiary relationship is current as of the most recent revision listed in the Update Log.