If your father in law has lot enough muscle tissue that you notice it, get the doctors on top of that. Surley they know that he has diabetes and that they are treating him and sharing all their information with you.
Muscle athrophy from inactivity is not the same as Ketoacidosis.
Dont want to scare you, but talk to the doctors and be very aware of the diabetes. Just ask a lot of questions so you are not guessing about what is going on with your father in law.