Ucgal,
Hopefully you have some good ideas or perhaps the attorney can provide some.Maybe you could hire an appraiser to calculate the value the contractor provided vs. the money paid. No matter what course of action you take you are probably going to need to establish a basis with a third party.I think and insurance appraiser or a contractor who normally works with insurance providers could do this. In your shoes I might try this and send it to the person and his insurer with a demand in an attempt to get the paper trail you will need established. Maybe you did all this already? As you probably know it will really come down to leverage against any means the contractor has to remedy the inequity.
I know some people you could call if you need to establish value. If they can’t help you I think they will point you in the right direction. I can give you or your husband an email if you want to discuss it off line. You probably have a handle on it, but just in case, I have some experience here.I am not looking for work. I don’t don’t get involved in these settlements professionally. I came by this experience by beign in a similar situation to yours and I know how helpless of an experience it felt like at first.