Contracts signed under duress are unenforceable. Further you can counter-sue the hospital for releasing your father's body without consent. Finally, most funeral homes are licensed by either the county or state or both. Contact the licensing department and let them know about this. Then Call your state legislator. Let him know and ask his administrative aid in charge of constitituent issues to help you. I have a feeling if the owner feels the heat of the goverment on his neck, he may relent.
Finally I would also contact the consumer affairs bureau of the local TV or Newspaper. I am sure they would love to jump on a story like this and may be able to get dad's body out of debtors prison.
It is probably cheaper to pay the 150 but you could find a lawyer to help. Or better call the local law school and see if their legal clinic would help you out.