You cannot sue the Navy. He needs to have an attorney review his discharge paperwork and see if he can petition for a medical retirement. These cases are very fact specific, and it would be impossible to answer that question without a review of his records.
This post is for information purposes only and does not constitute legal advice, nor does it establish an attorney client relationship with Mr. Cassara.
The Navy (and all military branches) are not public assistance. They also don't have "layoffs." I sounds like you're not getting the whole picture or accurate information. It sounds like he was involuntarily discharged instead of a Medical retirement. This is a very complex area of law and you've provided about 1% of the facts needed to give a thorough response. But understand unless the Navy committed some illegal action against him, you can't sue the Navy for separating a Soldier unless they violated his rights (such as a right to an administrative hearing before separating him, which he earned at year 6 in service).
Recommend having a complete honest discussion with him, and then if there appears to be illegal action, gather all documents and meet with a lawyer. Thank him, and you, for service to nation.
*Not legal advice, and you are not my client.
*NOT LEGAL ADVICE. YOU HAVE NOT PAID ME A RETAINER. WE DO NOT HAVE AN ATTORNEY CLIENT RELATIONSHIP. This is general information for educational purposes only. You should always hire a lawyer and reveal all the unique facts to get the best answer for your unique situation. Answering this question on a public forum does not create an attorney-client relationship.
There are a number of reasons why military personnel are being separated because of a draw down.
It may be they declined to allow a reenlistment?
It may be there was some misconduct that was used to justify a separation? Misconduct separations trump medical separations.
If he was administratively separated he would have received written notice of the reasons and the way he could "appeal" or contest the separation? That may make him eligible for a discharge review.
If he received an honorable or general discharge he should apply to the VA for a determination as to medical benefits.
Answering your question does not create an attorney-client relationship. Every case is different and a resolution depends on a thorough review of applicable facts and law. No attorney can guarantee a particular outcome or result.