Worth looking at https://www.anthropic.com/engineering/a-postmortem-of-three-...
They can “go insane” but it seems often to be infra related as opposed to anything one would consider hallucination. Smaller models will often get stuck repeating a word or phrase forever but that’s a bit different and nobody would call it hallucination.
When you can reliably prompt these things into insanity, then it's demonstrably not an infrastructure issue.