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Options from a contractor's point of view;
If he pulled a building permit, you can make his life miserable, starting with the building commissioners office in your town. Could file a complaint, which in Mass. would be followed up by his state's licensing board. Unresolved complaints can make it uncomfortable to get future building permits in that town. (squeaky wheel gets the grease, and gets the attention of the building inspector's office)
Since I was a PM for many moons, let me put it in your jargon WeeWee; If you got a trading error, COVER and forget it. It only will go the wrong way and draw the ire of regulators. So if it were me, as the contractor, I would be trying to come to a reasonable settlement before going to my liability insurance company, unless your $$ figure is worth it for me to file it. And I sure would be trying to not have a client making noise in the inspector's office if I intended to work in that town again anytime soon.
Hope that helps. Maybe the guy has calmed down and would understand what ammo you now could be holding over him. If not, get his insurance company and deal directly with them, or better, send your homeowner's insurance company after his liability company. The demands for receipts should be coming from them, not from the contractor. Could be smokescreen trying to send you away.
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