Negligence and malpractice could have led to HIV infection of as many as 42 Kyrgyzstan children. 14 healthworkers have been charged in the case.
The accused include doctors, nurses and a chief administrator. They had shown extreme carelessness during injection or blood transfusion, it is said.
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The BBC's Natalia Antelava in Almaty, in neighbouring Kazakhstan, points out that this is not the first such case in central Asia, and says the outbreak shows a dangerous trend of hospitals becoming the cause, rather than the cure, of infectious diseases across the region.
Last year, 21 medical workers were sentenced to prison terms for infecting 150 children with HIV in Kazakhstan.
The Kyrgyz case has deepened public concern over conditions in hospitals and the quality of health workers.
At least 30 other children tested positive for HIV since the investigation into the outbreak first began last summer, and new cases continue to emerge all the time.
The outbreak is surrounded by secrecy and confusion.
In the predominantly Muslim and deeply traditional region, HIV care is an enormous stigma, and families are extremely protective of the identity of their children.
Speaking on condition of anonymity, one international aid worker in Kyrgyzstan said that this stigma and the atmosphere of secrecy meant that outbreaks of hospital-acquired infections were extremely common, but most of them simply did not get reported.
Once largely confined to drug addicts and sex workers, HIV is now spreading across the community at large, says Abdumomun Mamaraimov, a contributor to Institute for War and Peace Reporting (IPWR).
Doctors are warning that the HIV is spreading fast in southern Kyrgyzstan, partly as a result of poor hygiene in hospitals but also through ignorance about how the virus is contracted.
Until recently, the incidence of infection was highest among drug users and sex workers, but the virus is now becoming more common among other parts of the population, including children.
The southern region of Osh has become the epicentre for new cases. Tugolbay Mamaev, senior doctor at the region's AIDS Centre, said infection rates had now reached a worrying level.
The Kyrgyz health ministry recorded a total of 1,500 cases of infection among the total population of five million in 2007, a 15-fold increase on the level recorded in 2002. Almost half the figure for 2007 - which include existing cases as well as new ones - were in Osh region, and one-third of the total were in the city of Osh itself.
"The distribution of the virus has shifted from the high-risk category to the general population," said Mamaev, adding that undergoing treatment at beauty salons and tattoo parlours, and also the circumcision ceremony that is standard practice for this predominantly Muslim population, could all be potential sources of transmission.
While officials investigate the rise in infections, many pregnant women believe poor standards of hygiene in the hospitals are at least partly to blame.
One woman named Anna spoke of her concerns when she and her child underwent hospital treatment in Osh.
"What are you supposed to do when you go to hospital for medical treatment and contract a fatal infection as a result?" she asked.
Anna said she had been forced to pay three times the normal fee to ensure that clean new syringes were used for her intravenous injections.
Despite this, she noted that needles from different patients were used to draw the anaesthetic novocaine from one common container.
"I told the doctors about it many times but they didn't care," she said. "They were completely indifferent."
When she heard that HIV had been detected in the hospital, Anna got herself and her baby tested. "Everything turned out fine," she recalled with relief.
While patients query standards of hygiene in hospitals in southern Kyrgyzstan, doctors insist the main factor behind rising infection rates is the low level of awareness about HIV/AIDS, and the poor quality of the information available.
"Given the current level of awareness, nobody around here is safe from HIV infection," said Dr Mamaev.
Mamytbek Ismailov, senior doctor at the AIDS centre in the neighbouring region of Jalalabad, agreed. Printed literature about HIV/AIDS had been issued in a variety of local languages but it was clearly not enough, he said.
International donors have done much to help combat the growth of HIV in Kyrgyzstan. The Global Fund to Fight AIDS, Tuberculosis and Malaria has given the country 17 million dollars over the last four years and has pledged a further 28 million over the next five years.
But the money does not filter down to remote country districts, especially in the south. "Nobody seems concerned with the HIV/AIDS problem in rural areas," said Dr Ismailov.
Azat Kerimbaev, deputy senior doctor at the Osh Regional AIDS Centre, said getting the message across about safe sex was not easy, and at times the staff faced open hostility from traditionally-minded locals.
He doctor recalled one angry parent telling him, "You're just advertising condoms. If I find a condom in my son's pocket, I'll kill him".
Several years ago a new book for older children called "Healthy Lifestyle", caused controversy in Kyrgyzstan because it contained a chapter on safe sex. Some public figures considered it outrageous and accused the book's authors of encouraging teenage depravity.
Since then, public figures such as the clergy have tried to be more constructive, helping shoulder the burden of public education on this sensitive topic.
Muslim clerics have discussed HIV/AIDS with their congregations, but according to one imam who wished to remain anonymous, the campaign has not yielded much in the way of results.
"First, the imams themselves know little about this issue. Second, the people who visit mosques are devout people who are usually far removed from the world of drug addiction and prostitution," he said, adding that in his view it was the latter groups that needed education programmes.
Osh's role as a hub for HIV infection reflects its strategic position on international drug routes. The city acts as depot and transmission point for heroin and opium coming in from Afghanistan via Tajikistan for onward shipment to Kazakstan, Russia and the rest of Europe.
Antonio Maria Costa, executive director of the United Nations Office on Drugs and Crime, UNODC, told a meeting of former Soviet heads of state in October that more than 200 tons of heroin - 20 per cent of Afghan production - was smuggled through Central Asia in a year. Kyrgyz security officials say between five and seven per cent of Afghan exports pass through their country, which would mean 10 to 14 tons based on the UNODC estimates. Much of this goes via Osh.
Inevitably, the flow of illicit drugs means they are cheap and readily available at this early stage in their journey, and the seemingly unstoppable growth in Afghan opium production has inevitably fuelled heroin use in southern Kyrgyzstan.
Kyrgyz police say there are 7,500 officially registered drug addicts, of whom 4,200 are intravenous users. More than 1,700 of these addicts live in the Osh region, and most inject drugs.
Many young drug users have criminal records and according to Dr Kerimbaev, are extremely careless about their health.
"These people care about absolutely nothing," he said. "I never saw any of them in hysterics or even shedding a tear after receiving a positive test result for HIV."
He sees a clear connection between organised crime and the rise of HIV. "I've never heard of the drug mafia suffering a setback, so the number of people with HIV/AIDS is bound to increase," he said.
Another factor behind the intensive spread of HIV is that prostitution has become big business in the south. Local newspapers are fuller than ever of advertisements for apartments rented by the hour or night.
"You have such apartments in every high-rise block," one resident of Osh city claimed, adding that many of the "night moths", as prostitutes are known here, come from neighbouring Uzbekistan.
Uzbekistan is thought to have the highest rate of HIV infection in the region, with about 38 carriers for every 100,000 members of the population, and the rate of new cases is rising fast.
Clearly the situation is reaching alarming proportions across the region.