THE WORDS are right there in black and white, defying all common sense and logic.
“The loss did not occur from hydrostatic pressure or velocity flow but was caused by localized land subsidence.”

Mike and Maureen Mazzucca’s house on a lagoon in Beach Haven West was twisted and sunken in places after the tidal surge from Hurricane Sandy washed up over a 6-foot-high bulkhead and swamped the first floor with three feet of water.

“The house was lifted three or four inches off the front stoop,” Mike Mazzucca said. “There were huge cracks in the foundation. The floors were bowed. We couldn’t open the doors.”

A FEMA representative came within days and told them the house was unsafe – a total loss.

The Mazzuccas hired an engineer, Robert Burdick of Point Pleasant, to further assess the damage and he said the foundation failure was caused by the storm.

But the couple’s insurance carrier, one of about 50 private companies nationally that handle government-backed flood insurance, ruled flooding didn’t cause the foundation to crumble. The insurance company blamed shifting soil or “localized land subsidence.”

The Mazzuccas, who paid about $2,000 a year for flood insurance for the maximum allowed coverage of $250,000 for the structure and $100,000 for contents, were offered $90,905 to replace their home.

Kristine Pyzyna’s story is pretty much the same. Her house in Ocean Gate was 2 feet above flood level, but the sea water from the breach at the Mantoloking Bridge washed into her neighborhood during Sandy.

Sandy victims in lawsuit over what they say are false engineering reportsThis original engineering report on the Sandy damage to Mike and Maureen Mazzucca’s house in Beach Haven West reads: “The loss did not occur from hydrostatic pressure or velocity flow but was caused by localized land subsidence.”

“We found things from Seaside in our backyards,” she said.

Her insurance company determined her foundation failure was “unrelated to forces from flood waters” and “not structurally damaged by hydrodynamic forces, (or) hydrostatic forces” associated with the “flood event of Oct. 29, 2012.”

“Flood event.” As if it was a leaky pipe, not a series of 30 tidal waves that broke through the barrier island.

Her claims adjuster, sent from Florida by the insurance company, added insult to injury by making Pyzyna account for every dish and utensil destroyed by the storm. She ended up with an itemized 26-page list filling a notebook, including pictures.

She, too, paid $2,000 a year for required coverage of $180,000 for her structure and $50,000 for contents. She was offered $54,116.16 and $27,188. When Pyzyna tried to settle, she was referred to three different companies who underwrote her policy.

“I felt like a ping-pong ball,” said Pyzyna, a lawyer for the University of Pennsylvania. “There is no doubt in my mind there was collusion going on between claims adjustors and insurance companies.”

The Mazzuccas and Pyzyna have joined a lawsuit that attempts to prove that point and get homeowners fair settlements.

Attorney William P. Kelly, of the law firm MacArthur Kelly, represents 700 Sandy victims who claim they were cheated out of insurance payments by companies that doctored damage reports by engineers, or instructed adjusters to give artificially low damage estimates.

Kelly didn’t have to look far to find his first clients. They are his sister and brother-in-law, who live in Rockaway, Queens, near the neighborhood that burned during the storm and a few blocks from Kelly’s parents’ home.

“They got 5 feet of water from the Jamaica Bay,” Kelly said from his New York office. “When they told me the insurance company said the structural damage wasn’t caused by flooding, I said, ‘Don’t worry, they’ll work it out.’

“Then I started getting more and more calls. Truthfully, I couldn’t believe it at first,” Kelly said. “I kept telling people to refile and they’ll eventually pay out.”

But the insurance companies didn’t pay out. And the calls kept coming. Six months after the storm, Kelly had 50 clients. By that summer, the number climbed to 250.

“It was the same story. The insurance companies said their damage was caused by soil movement or wind,” Kelly said. “It defies logic that destroyed homes, from the tip of Long Island to way down into Jersey Shore, were all built on shifting soil.”

In putting the case together, Kelly’s firm found possible evidence of fraud. As first reported by International Business Weekly and then “60 Minutes,” local engineers claim their reports were changed by insurance companies. Soil erosion and wind were blamed for destruction, not Sandy’s powerful waves and bay flooding.

What Pyzyna called “collusion,” Kelly saw as “a perversion of the whole process.”

“Nobody wants to see fraud, but this became prosecutorial,” Kelly said. “These people lost their homes, and their families were displaced, and then they were essentially asked to defend (the amount of) their damages.

“I couldn’t understand why the insurance companies would do that,” Kelly said. “It’s not their money. It’s the government’s money (for FEMA-backed flood insurance). So why would they compound people’s misery – people who have lost their homes and all their possessions – by defrauding them out of a fair and legal settlement.”

Pyzyna said she was “made to feel like a criminal” when she asked for reimbursement of items in her dishwasher contaminated by sewage backup.

“The adjuster actually said, ‘How do I know these pictures aren’t of the plates you had in the cabinet?’ ” she said.

“Our guy was like, ‘See these cracks (in the foundation)? They were there before,’ ” Mike Mazzucca said. “I said, ‘Yeah, but the house didn’t fall down before.’ They looked at normal cracks and made it sound like the house was unstable before it got hit by a wall of water.”

FEMA communications director Rafael Lemaitre, in a phone interview Thursday, said there are about 2,000 cases of fraud complaints against FEMA-backed insurance carriers.

“These allegations are deeply, deeply troubling and we take them very seriously,” he said.

These allegations are deeply troubling and we take them very seriously.” — Rafael Lemaitre, FEMA

Lemaitre said new FEMA director Brad Kieserman is “very intent on making sweeping reforms to the National Flood Insurance Program and has already taken steps to add accountability and transparency.”

And that’s not just moving forward. That’s looking back, too. The agency plans to create a pathway to reopen any Sandy claim in which people believe they were cheated or given low payouts by flood insurers.

“There were 144,000 flood claims over Sandy,” Lemaitre said, “and 99 percent were handled without any problems that we know of. But we’re taking the unprecedented step to establish a process for people who have any questions and concerns about their claims. We will reopen those claims if necessary.”

Lemaitre said those plans will be finalized in several weeks.

Mark Di Ionno may be reached at Follow The Star-Ledger on Twitter @StarLedger and find us on Facebook.

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