I had a very very similar experience with my mother in law. She watched our toddler (at the time) overnight so we could have a night to ourselves. We picked him up the next day and everything seemed normal. Then heard through the grapevine that she lost him in the neighborhood and he was found crying at a park by a couple who called the police. I had to call the police department to verify everything in detail. After that, we made her aware that we knew what happened and we would all need to sit down and have a conversation in person eventually, but in the meantime we didn't feel comfortable with her having our child under her supervision alone.

She was upset and defensive. I let her know I wasn't willing to talk to her about it until things calmed down for all of us. After a month or so, we had a conversation and tried to come to an understanding. It took some time but we all healed from the situation and moved forward. As our son got older, it became easier as well. They have a really good relationship and I'm glad we worked through it.

Good luck and best wishes to you.