You could take your concerns to the diocese since the school is offering no explanation for their actions.
On a side note, I went to Catholic school too. One of my classmates was suspended for a few days for reasons her parents found ludicrous, so they took her shopping and let her do things for fun the days she was supposed to be suffering at home. If the school thought she was learning their lesson, they were quite mistaken.
I know this doesn’t compare with what your daughter is going through now, but if you’re not able to get the school to listen to reason, maybe there’s something she can do to make the best of things.
PS - show them this article about a person with Type1 who just scaled Kilamanjaro - we can do most anything we put our minds to!