I don't know anything about the liability here, but I do think that a properly run DSD class is a good thing, as it gets people interested in diving who might never consider just signing up for OW instruction. Like everything, the devil is in the details. I can easily see a situation where a non-diver at 40 feet had a bit of air added to their BC (OP, that's the part of the dive gear that provides buoyancy). If that happened, someone with no dive experience could easily have a runaway ascent, since you get more buoyant as you ascend. The instructor would be totally responsible for this, IMO, since they need to identify any and all problems for the person doing the DSD.
As for the medical aspects of the case:
Barotrauma injuries are caused by a rapidly developing pressure differential between the gas trapped in a partially ventilated space (middle ears or sinuses) and ambient pressure. Specifically, a pressure differential that can't be equalized in the typical fashion (paranasal sinus outflow tracts or Eustachian tubes). Usually, this is a problem on descent because it's harder to get gas into these spaces than for it to get out, but it is certainly possible to have the differential develop on ascent ("reverse block"). Also, injury on ascent might be more common because of more rapid ambient pressure changes, since uncontrolled ascents are a real thing, while people developing pain on descent usually can slow themselves.
Sinus barotrauma rarely causes any problems beyond a nosebleed. In unusual cases, you could have injury to the eyes (an orbital blowout).
Eardrum perforation is a possible complication of ear barotrauma. Assuming no pre-existing ear disease, these usually heal on their own spontaneously. If they do, hearing often goes back to normal, and the eardrum can be as as strong as before. So maybe the OP won't have to deal with litigation, etc...
If the eardrum doesn't heal, it can usually be fixed by an operation called a tympanoplasty, again resulting in an intact and strong eardrum. Of course, there are some cases where there is permanent perforation or ear symptoms, but they are the exception rather than the rule.
