They should be paying for your carpet (the labor, time off from work for the install, etc), giving you a refund on the mt, paying you for your time. This could have easily set the house on fire and killed someone. Or it could have been in your pocket or a child's pocket. Also, I'm guessing you will never view a battery powered device the same way again and you will think about this for many years to come.
I would not return the device to them until you have been fully compensated. They will surely want to get the device from you to bury the evidence. Ultimately, I think you will get the usual m-audio support jerk-around-fest and should just contact a Good lawyer (there is a huge diff between lawyers and great lawyers.. don't be afraid to ask about recent similar cases they have handled and the outcomes).