First of all, and most importantly, Congratulations!
Secondly, I can understand why this is so disturbing. I'm semi-familiar with HIPAA, or at least the concept of it, and even if this does not fall under HIPAA, ANYTHING having to do with medical records should be a lot more confidential than just merely stamping it "confidential." I used to work with personnel records, and I'm not sure whether it was a state or federal law, but at one point we had to put all doctors notes (particularly anything indicating a medical condition) in a separate folder in a locked file cabinet only to be accessed by very few persons.
At this point, the harm's already been done and I can't see any way of repairing it. I'm glad they took it seriously and revised their procedures, although I'm sorry it was at your expense. I'm also sorry about your sister, I know quite a few people in that situation. I don't think there's really anything you can do, it's something she needs to deal with on her own. I hope that in time things will smooth over. In the meantime, please take care of yourself and your little one that is on the way!