What a crappy situation to be in! So sorry for you. 
Toddlers are toddlers, they all push and shove to get what they want and others will fall and get bumps and bruises. The 12 month old will most likely be doing this as well as he gets closer to the 18 month old mark.
If this father can not understand this which he obviously can not, then his little 12 month old definitely needs a nanny with no other kids around.
Gee I would love to see when this child starts school.
What are they going to do then? I think they may need to hire a private teacher for him in their home so that he never gets pushed or shoved.
If you do not want to terminate perhaps a nice letter to him explaining why his rates are going to increase would be a good idea! Inform him that because of his threat of involving a third party you have decided that you can not run the risk of this happening again. Because you can not allow this child to sustain any other injuries, which are basically beyond your control as you have other children to tend to, you are going to be hiring an assistant who can be with his child x number of hours per day for x number of $$$ per day!

Toddlers are toddlers, they all push and shove to get what they want and others will fall and get bumps and bruises. The 12 month old will most likely be doing this as well as he gets closer to the 18 month old mark.
If this father can not understand this which he obviously can not, then his little 12 month old definitely needs a nanny with no other kids around.
Gee I would love to see when this child starts school.

If you do not want to terminate perhaps a nice letter to him explaining why his rates are going to increase would be a good idea! Inform him that because of his threat of involving a third party you have decided that you can not run the risk of this happening again. Because you can not allow this child to sustain any other injuries, which are basically beyond your control as you have other children to tend to, you are going to be hiring an assistant who can be with his child x number of hours per day for x number of $$$ per day!
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