This sounds like a very sad situation, indeed.
I don't think it is fair to "blame" anyone. The hospital obviously was not sensitive to her needs, and did not have protocols in place to care for a diverse population of patients (whether deaf, or cannot speak/read English)
It is also important for patients (all patients) to know their rights. She has a LEGAL RIGHT to an interpreter (not a friend/relative) at the hospitals expense.
Had there been a professional interpreter present - I highly doubt that the interpreter would have allowed the nurse to speak in such a crude manner, and would have been sure to correct any misconceptions that the staff may have about your sisters intelligence.
I am a first year nursing student, who also knows ASL - with the hope that my patients will not have to go through the traumatic events that your sis did!
My ASL instructor is Deaf also, and she is not a "shrinking violet" type! LOL! In a way, she HAS to be assertive - that is the only way to make sure that what is happening is in her best interests. (whether shopping, etc...)
I think education is needed all around in this situation - with the hope that something like this will not happen again.
On a side note - because both parents are Deaf - that child is going to be forced to grow up very fast. Most CODAs (Children of Deaf Adults) wind up being the "translator" to the outside world starting at a VERY young age.
I suggest you learn ASL if you haven't already - and try to educate yourself and others about the d/Deaf community.