Is the sister obliged to return the money to her brother, which he paid for their father's treatment, knowing that she spent a portion of the amount reimbursed by health insurance on her parents, and currently has no income, while the brother is well-off and demanding his money?

What the son spent and then got back from health coverage is considered his property, and his permission must be sought before disposing of it. The returned money was a trust with the wife, and she overstepped by disposing of it, thus guaranteeing its value. If she is in financial difficulty now, it remains a debt upon her. The brother should forgive her, especially given his financial ease and her difficulty.