My opinion is that your niece's mom doesn't like you very much.  In other words, there's some other reason why she doesn't like you that has nothing to do with this, and she is taking this out on you by blaming you.  Quarantining children who have ear infections is laughable- the prudent protocol would be to tell the child to resist touching their ears with their fingers, and to sanitize the outer ear and discard/sanitize any drainage from the ear.  As to the etiology of type I DM, your niece's mom could fire up a Nobel symposium if she is claiming to know what causes it.  While it is true that some etiologies are likely involving viral damage to the pancreas, which virus and how is unknown.  My guess would be a GI virus, maybe from something ingested, along with a genetic weakness in the pancreas or the immune system in fighting it off.  So yes, it's possible that a virus caused her DM, and it's possible I'll win the lottery tonite- but blaming you for either is spurious at best, and belligerant at worst.