Posted on: Thursday, July 24, 2003

Abbott Labs subsidiary to pay $600 million

Associated Press

EAST ST. LOUIS, Ill. — An Abbott Laboratories subsidiary has agreed to pay $600 million after admitting its employees tried to help undercover agents defraud Medicare and Medicaid.

The subsidiary, CG Nutritionals, pleaded guilty to obstructing a criminal healthcare investigation yesterday in federal court, after a sweeping federal investigation into fraudulent sales of medical equipment.

Abbott's Ross Products division was the defendant in the settlement, for which its corporate parent, Abbott Laboratories, announced taking a $622 million charge in the second quarter.

Ross also agreed to reform the way its medical equipment is marketed as part of a five-year probation agreement.

Abbott issued a statement saying the plea and sentencing agreement will not have an impact on its business, including that with the federal Medicaid and Medicare programs.