Yes, they are covering it up, if there isn't any coolant in the oil. I believe they ran it dry and it let go. I would file a claim if I were your friend and see where it goes. Small claims court if the lube place doesn't budge. Not sure what's required for documentation, but I'd take pictures of the oiled surfaces at tear down, bearings. Also pictures of the oil pan / oil to show that there is no coolant. I would also keep a sample of the oil and send it in for analysis (no coolant, high levels of metals).
This is why I change my own oil. At least I know what I did wrong when I run it dry.
G