Yeah, that begs a counter claim including pain and suffering, not just from the incident but the bill. If he was not cited, I fail to see a basis for the claim other than the city needs any money it can squeeze. I am guessing that because there was no claim made by him against them, the system automatically billed him as 'at fault'.
There is a lawyer that specializes in cyclist ceases. Maybe he has a colleague in NY, NY.