This stuff absolutely happens and is fairly common. This (and worse) has happened to my cousin after he was injured in Iraq.
He was sent to Walter Reed after he recieved a major head trauma after an IED exploded on his convoy around Falluja in Dec '04. He was in a coma for 63 days. The med care he recieved at Walter Reed was excellent, but he was moved to be discharged very quickly due to the high volume of injured coming in. He had recovered a good deal physically, but the head trauma left with him with a lot of mental damage. Basically he is crazy (tho is getting better w/ time and lots of meds.) He lives in what I can only describe as a dream state. He is fairly normal to talk to, he will tell you about stories of being on patrol in Iraq, but then follow up with a story that is absolutely ludicrous, but he believes it to be absolutely true, even if it is competely illogical. Eg. He was taken to Iraq when 2 guys from the CIA flew over to his house and picked him up in an airplane cockpit (not the whole airplane, just the cockpit....) and flew him to Baghdad. You have to explain to him that that isn't real, and couldn't have happened. He doesn't totally believe you.
Anyway, after he was discharged the Army lost complete track of him. He wasn't recieving the mental counciling and treatments he was supposed to recieve. He lives in a rural area and there are few treatment centers, and when contacted by the family the Army was very slow and cooperative.
Lowlights:
The Army recinded the Purple Heart he was to recieve, on the day of his discharge. (and against personal assurances from Rummy and his wife who visted the ward several times in his stay)
-It was decided it was a "non-combat" injury, b/c the final report concluded that he left the vehicle to secure the situation after the IED exploded on the lead cars ahead. In the chaos, a cargo truck slammed into his HV, killing the private in back and rolling the truck onto him. It was an "accident," not combat.
-You may or may not know, combat vs non-combat injury benefits are very different. Guess which one is lower. Recinding the Purple Heart has huge consequences as well, among them his 10 yo daughter whould not recieve the college scholarship benefits awarded.
2 months later he was notfied by the Army they would be withholding $20,000 from his pay based on missing equipment (his coma is not their problem) other accounting failures.
He is notified that ~summer that he will be shipping out again in the fall. Meanwhile he's sleeping at night in foxholes he digs in his yard because he thinks the Iraqis are going to attack his house. The army hospitals do not care to pick him up for treatment.
The whole body armor pay charges scandal goes public sometime last summer IIRC. The family contacts local papers, and some national media orgs after they ran stories to report my cousins experience and on going battle with the army over his continuing withheld pay.
A local reporter picks up the story and publishes no less than 3 articles in the paper following my cousin, finally attracting the attention of the State Senator. He's pissed, and finnally things begin to happen.
My cousins pay is finally released in full, last week, some 14 months after he was injured. His injuries are also upgraded to "combat-related" and recieves the max injury bonus for all the time he spent in the coma. Only $100K at that.
My cousin was never wealthy and sole income earner for his family, hence why (in part) he joined the reserves. The pay you recieve during activation is little, and it was even less after he was medically discharged. His family is financially ruined, especially after the additional burden of withheld pay for a year and his inability to work (bc he's loco) and support his daughter. Only through the family's support has his family survived.
He was in theater 3 months when he was injured, but he will never be the person he was and his daughter has essentially lost her father forever.
Please excuse if some of the details are incorrect, they are to the best of my knowledge but the whole thing has been a giant cluster F, and no one has good answers. We don't really even know how he was injured as the final report is the 5th and completely different version we were told. Parts of it contradict what his unit member's attest to. We'll never really know.