You need to learn all you can about the Army INCAP pay and read the regulations. INCAP Pay is used when the member is unfit to perform military duties OR can show a loss of civilian income--not both. He should not need to provide proof for loss of civilian income. They are trying to apply the wrong criteria.
http://www.dtic.mil/whs/directives/corres/pdf/124102p.pdf
6.2.1.1. Member Unable to Perform Military Duties
6.2.1.1.1. A Reserve component member who is unable to perform
military duties, as determined by the Secretary concerned, due to an injury, illness, or
disease incurred or aggravated in the line of duty is entitled to full pay and allowances,
including all incentive and special pays to which entitled, if otherwise eligible, less any
earned income as provided under 37 U.S.C. 204(g) (reference (c)) and DoD 7000.14-R,
Volume 7A (reference (d)). This has been commonly referred to as incapacitation pay.
DODI 1241.2, May 30, 2001
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6.2.1.1.2. A member authorized pay and allowances under Section
204(g) of reference (c) shall not be allowed to attend inactive duty training periods or to
acquire retirement points for performing inactive duty training. However, a member may
earn retirement points in order to satisfy the requirements for a qualifying year of service
by completing correspondence courses approved by the Secretary concerned.
6.2.1.2. Member Able to Perform Military Duties
6.2.1.2.1. A Reserve component member who is able to perform
military duties, as determined by the Secretary concerned, but demonstrates a loss of
earned income as a result of an injury, illness, or disease incurred or aggravated in the
line of duty is entitled to pay and allowances, including all incentive and special pay to
which entitled, if otherwise eligible, but not to exceed the amount of the demonstrated
loss of earned income or the amount equal to that specified in subparagraph 6.2.2., below,
whichever is less.
1. IAW DODI 1241.2, pay and allowances will commence within 30 days of the date that the injury, illness, or disease was reported
2. IAW DODI 1241.2, Medical treatment for an injury, illness, or disease incurred or aggravated in the line of duty is not delayed because of administrative requirements
3. IAW DODI 1241.2, Pay and allowances are not terminated due to administrative oversight.
4. IAW DODI 1241.2, That pay should commence not later than 30 days after the illness, injury, or disease was incurred and shall continue without interruption
5. IAW DODI 1241.2 A Reserve component member who is unable to perform military duties, as determined by the Secretary concerned, due to an disease incurred or aggravated in the line of duty is entitled to full pay and allowances
6. IAW DODI 1241.2 The member's entitlement to healthcare and pay and allowances under this Instruction shall terminate on the date that the member is found fit for duty or is separated or retired.