Prosecutors say George and Rhonda Houser, who ran the Forum Healthcare Group, submitted the fraudulent claims from 2004 until the state closed the three nursing homes they operated in 2007. The two pleaded not guilty to the charges Friday in federal court in Rome and were released on bond.
U.S. Attorney Sally Quillian Yates said the married couple used the money "to buy cars and real estate while their nursing home residents went without basic necessities, such as food and medicines." She said the services that did trickle down to the elderly were "so far below Medicare and Medicaid standards that they were worthless and harmful."
Attorneys for the couple did not immediately return phone calls seeking comment.
The Housers managed two nursing homes in Rome and a third one in Brunswick that housed about 300 elderly residents altogether.
Prosecutors say they started pilfering the money in 2004, around the same time they began having problems meeting their payroll.
They failed to repair washing machines, a balky air conditioner and a leaking roof, according to an indictment. Pantry stocks were so low that some employees spent their own money -- even as their paychecks were bouncing -- to buy the residents milk, bread and other staples, the indictment said.
Much of the nursing staff eventually resigned because the Housers were writing bad paychecks, authorities say. The Housers hired a check-cashing service to cash the employees' paychecks, and in December 2006, prosecutors say George Houser wrote the service a bad check for $120,000.
All the while, prosecutors say, the Housers were using the company's account as their personal piggy bank.
The couple bought a Mercedes-Benz with some of the funds and 46-year-old Rhonda Houser received at least $100,000 in checks or transfers from the account for her personal use. About $1.3 million from the account also went to buy George Houser's ex-wife a home in Atlanta.
George Houser, 62, is charged separately with failing to pay his employees' payroll taxes to the IRS and failing to file personal income tax returns.
Authorities say they will continue to investigate and root out health care fraud.
"Pure greed being placed above the well-being of our most vulnerable citizens will not be tolerated," said Derrick Jackson of the U.S. Department of Health and Human Services.