Angela,

It is possible though not common to have a false
negative skin test.  However about 50% of milk allergic
one year olds will outgrow a milk allergy by the time 
they are two, and most milk allergic children (over 85%)
outgrow it by the time they reach five years old.

Having said all that, I would still be very nervous 
to put my 16 month old through a controlled milk challenge,
and I can understand why you feel that way--especially with a
history of anaphylaxis. I would feel compelled to ask a lot
of questions regarding the potential risks.  And, even if the
challenge results in a negative result, would it still be
"safe" to reintroduce milk into your child's diet?  If the 
allergy has dissipated or is dissipating, could it be
exacerbated (flare up) if milk were to be given to her again 
so soon? What does the literature say to support giving a 
milk challenge to a 16 month old?

Remember that a mother's instinct is usually right!

Lynda