Sorry to hear the trouble. The police rely on the towing companies for their day to day services and contributions. If you really want to do something about this, dig up some dirt and report them to the corruption investigative offices (city, county DA, consumer hotline). Filing suit in small claims court may not be worth your time and besides, any damages assessed will be nothing. On the other hand, if you can find other similar cases, criminal charges are another matter; do watch your back though.
Agreed. No harm=no foul. I'm glad the towing company is owning up to their mistake, though. Maybe they are not so sleazy after all.
Update I just had to replace the right front wheel hub & bearing assembly at 138,660 miles. It is very likely that it was damaged by the towing. The brakes had not felt quite right since being towed (I thought it was my imagination, since the tech could not find any problems), but the brakes are back to normal now. If your Prius gets pulled onto a flatbed, have the tech take a close look at the hubs and bearings.
Did you call the mayor's office? I would send him/her a letter and cc the police chief describing your frustration. You are a voter and a taxpayer. Consider writing a letter to the editor of your local paper as well.