Currently, If a Service Member is involuntarily separated, they are eligible to receive a lump sum Separation Pay. However, if that Service Member receives any VA disability, those payments go towards paying off the debt of the Separation pay before that service member receives any payments.
The same applies to an active duty Service member who transitions into the Reserves. The VA payments are adjusted for Drill payments.
Service Members who honorably served and was disabled in the process should not be penalized.