First call the Nassau County Department of Consumer affairs. Ask for Commissioner Madeline Farley - an excellent public servant. Have her check whether the contractor is registered with the County. If not, they may not be able sue you or file a lien against your house. More likely than not she will take some kind of action and intercede on your behalf. Otherwise, you'll need to hire a local attorney to 1) sue them for failing to do their job properly and 2) set aside the mechanics lien and 3) get your insurer involved.
If you'd like to discuss, please feel free to call. Jeff Gold Gold, Benes, LLP 1854 Bellmore Ave Bellmore, NY 11710 Telephone -516.512.6333 Email - Jgold@goldbenes.com
How to fight a lien in New York is a very common question. The answer is, unfortunately, not simple. While Nassau County Consumer Affairs may, and I stress may, intercede on your behalf, they unfortunately do not have a lot of "teeth" to force the removal of the lien. For removing the lien, only the Nassau County Supreme Court can help you if the contractor will not remove it voluntarily. There are a few things you should do here. First, you should (or an attorney for you) serve a demand pursuant to Lien Law Section 38. This will itemize the lien for you since you believe the bill is inflated. Second, you need to determine if the face of the lien itself has a problem. Because of the intricacies of the Lien Law, you almost certainly would need an experienced lien attorney to help you with this. If there is a defect on the face of the lien, then you would be able to file a special proceeding under Lien Law Section 19 to have the lien discharged. If there is not a facial defect, you would need to file a demand under Lien Law Section 59 forcing the lienor to foreclose and then, depending on the lienor's chosen course, either move to discharge the lien for failure to foreclose on time or defend yourself in a foreclosure action (either by showing the lienor did not have a license, the work wasn't done, the work was overbilled, etc.).
Unfortunately removing a lien is expensive and in all but a few rare circumstances you are going to have to absorb your legal fees in getting it removed (even if it was improper). To keep your costs down make sure you hire a competent attorney that is familiar with New York's lien laws - not all attorneys are the same.
Some of the links below may provide you with some more information on the process for removing a mechanic's lien in New York.
The information provided herein is for informational purposes only and does not constitute legal advice. No attorney-client relationship is created by this answer. You should consult with a local attorney regarding your specific situation to obtain legal advice.