Yes, if you test positive you have to notify the public hospital closest to you (there's an online form). They call you a couple times to check how you are and provide meds. After you test negative they'll give you a certificate of recovery that students need and some employers require for missing school/work. I assume you can use it for whatever you want though.
If the immigration officer at the airport was a decent person they should have told him, "your visa will be canceled if you don't go buy a reentry permit." Unfortunately, some people just aren't very nice.
If he left the country and didn't apply for a re-entry permit, his ED visa was canceled. He no longer has an ED visa. He needs to contact his school and start the application process again. That was a big mistake.