I have to say, I dislocated my own son's elbow when he was about 3. It is actually very easy to do in young children, at least according to my pediatrician. I was walking him into preschool, holding his hand, he tripped and fell, so I ended up pulling his arm at an odd angle. I did not notice anything was wrong at the time and he did not complain about it at the time. It wasn't until about 2 hours later that his teachers called and said he was complaining that his arm hurt and not moving it. Picked him up, took him to the Dr., she popped it back into place very easily, he was fine.
So, while I am not trying to defend anything that might have happened, it is quite possible that the counselor didn't know anything had happened, it may well have been a perfectly innocent situation. As a parent, I still would have reported it to the staff and management involved so that they knew, but based on my own experience, I'm not sure I'd assume the counselor was trying to cover anything up, she may not have realized.