They didn't expect it to fall. They were aware that their satellite was a secondary payload and would be abandoned if need be. I don't think anyone expected the Falcon 9 to lose an engine.
> "Orbcomm understood from the beginning that the orbit-raising maneuver was tentative," Nelson wrote. "They accepted that there was a high risk of their satellite remaining at the Dragon insertion orbit. SpaceX would not have agreed to fly their satellite otherwise, since this was not part of the core mission and there was a known, material risk of no altitude raise."
High risk, to me, says that there was a pretty good chance it was gonna fall.
> "Orbcomm had planned on reaching an altitude of 466 miles above Earth..."
> "Due to the engine shutdown, the Falcon 9 used slightly more fuel and oxygen to reach Dragon's intended 202 mile- (325-km) high orbit. Over the next 2.5 days, Dragon flew itself to the station's orbit 250 miles above Earth. It reached the $100 billion outpost, a project of 15 countries, on Wednesday."
Initial Dragon Orbit: 202 miles above Earth
ISS: 250 miles above Earth
Desired Satellite Location: 466 miles above Earth
There was only a 95% chance of the rocket reaching the location 466 miles above Earth (due to the reduced fuel reserves), so they didn't perform the burn, because NASA's contract with them forbade it (had to be >=99% chance of success).
The expected outcome (F9 upper stage doing the raising) was considered non-risky, and I'm sure that's the premise the insurance company was operating under when they agreed to insure the satellite.
Quoth the article:
> Falcon 9 had enough kerosene fuel left over to relight the engine, but the amount of liquid oxygen "was only enough to achieve a roughly 95 percent likelihood of completing the second burn, so Falcon 9 did not attempt a restart,"
I doubt many satellites have enough maneuvering fuel on-board to raise their orbit like that.
My point was more that, prior to the engine failure, raising the orbit with the second stage was considered non-risky. You're correct that after the failure, raising the orbit with the second stage was risky.
Besides polluting the relationship with SpaceX, raising a fuss would put their own plans into doubt. Orbcomm's stock price already fell 15% in the past week, I don't think they need more trouble:
http://finance.yahoo.com/echarts?s=ORBC+Interactive#symbol=o...;