Thank you for the information and your question and I am sorry to read about your son's situation. I can't second guess the Command's decision in this case since I don't have the facts from their perspective. However, I can tell you though that because of the cost in terms of money and time to train servicemembers, a Command is not going to discharge someone that they believe is medically qualified to be retained. Again though, don't know what evidence they have. Somnambulism though is service disqualifying in the sea services, like the Coast Guard.
Your son is not required to agree to the discharge, only acknowledge that he received the paperwork. If he refuses, he can still be separated. The Command will just note that he refused to sign but that he was given an opportunity to read his paperwork. If he believes their conclusion was incorrect, he can, after he is separated, file a petition with the Coast Guard Discharge Review Board.
The discharge is not adverse, it is a neutral discharge, Entry Level Separation (ELS). He would not be considered a Veteran under laws that provide for Veterans' benefits though since he did not have the requisite service time.
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