I just wonder how old the child was and if the bike had been ridden prior to this accident.
It doesn't matter. Mountain bikes are supposed to be able to sustain hard riding. I've put many bikes together and have adjusted brakes. An investigation can show whether or not the brakes have been tampered with or if it was a company default. It's possible the bike should have been rejected going down the assembly line.
As far as the large amount sued for, it depends on the injuries. Some insurance companies won't pay if another insurance company is at fault. The story needs to entail more information.
I would think before actually filing suit, the attorneys would have known the condition of the brakes and I would also think the defense attorneys will have their own "expert" examine the bike.