IIRC, the battery is considered an emissions item and is warranted for 150000 miles. Don't know if this is transferable though.
You should go through all the manuals and papers that came with it - it's explained somewhere in there.
The warranty varies some by state; California being longer.
You REALLY need to contact Toyota corporate and/or see another dealer.
If you are only 1,000 miles past the battery warranty, Toyota might bend a bit.
It is kind of unusual for the hybrid battery to fail at that age and mileage.
If it really comes down to you having to pay for a new battery, shop around a bit; do some internet searching for "hybrid batteries" and similar.
IIRC, others have reported getting replacements installed for around $2500.