You don't mention if you have treated your own home for lice as well. Head lice can live in many places. You need to clean all of your hairbrushes and combs with lice killing stuff and I would highly suggest a quick dip in boiling water.
ALL of your sheets, towels, etc., must be washed in HOT water with bleach for whites and colorfast colors.
There is spray you can buy to spray all of your furniture, etc.
I don't understand why the two of you found it necessary to confront the BM and demand she address the problem. The solution to this is as simple as driving to the local drugstore and buying RID (head lice treatment). Then it would have only been necessary to alert the BM that the problem existed and how you had treated it.
If the child has had head lice 5 times, it is very likely she is getting it again by being at your un-treated home. Calling the school is an excellent suggestion.
Head lice are yucky and none of us want to think about our kids having them. But the facts are that it is going to happen at least once. Informing the school and your child's playmates is the most curteous thing to do. Believe me, my kids had a friend who had it and her mother didn't tell anyone. The whole neighborhood had to deal with it several times before she fessed up. Makes you feel like whacking them in the head! It is nothing to be ashamed about and I agree with Mixed - the court won't see it as neglect. There are some childhood issues that none of us are able to avoid.
I don't mean to offend you two - just saying lighten up - some things that happen with kids, happen to almost all kids, not just yours. If there are other issues going on that you are concerned about, then document and pick your battles wisely. The reoccuring head lice may be considered along with a list of other issues, but by itself isn't a big deal.
PS - don't forget your car if you have cloth seats. AND most importantly - don't forget to check your own scalps.
Good luck!