A four-year legal battle over compensation for Canadian veterans is playing out in a Halifax courtroom.

More than a dozen veterans gathered Wednesday in Federal Court to show their support for a class-action lawsuit against the federal government.

'The most severely disabled pay the highest price.' — Dennis Manuge, lead plaintiff

The suit revolves around long-term disability benefits paid out to retired members of the Armed Forces under their military insurance plan.

The veterans involved in the suit were injured while serving their country. They claim the government is using the insurance plan to claw back pension money meant for pain and suffering because it's deemed income.

Dennis Manuge, the lead plaintiff, is a former mechanic who was injured in 2003. He says he lost about $10,000 between then and 2005.

However, he said, others are losing up to $3,500 a month.

"It's never been about the money or Dennis Manuge," he told reporters outside court.

"It's been about the people you see here and the gentleman in the wheelchair and those folks that are a lot worse off.… The most severely disabled pay the highest price."

Manuge said the amount owed to all veterans runs as high as $500 million.

The class-action suit was certified in 2008, a year after Manuge launched his case.

Michael Watson, of East Hants, had to leave the military after developing ALS. He uses a wheelchair and has to be fed through a tube.

He said the government clawback is costing him about $1,800 a month.  

"I'm capable of surviving, but I'd be getting more money for my family to be able to just do more with my family because money for me right now, what am I going to do with it?" Watson said.

Lori Rasmussen, a lawyer representing the federal government, said the long-term disability benefits are only meant as a top-up to guarantee members receive 75 per cent of the income they were making before they were released from the military.

"Income is money that you receive. I mean, there are lots of definitions of income and they've provided some dictionary definitions and we'll be providing some dictionary definitions," she said.

"Our argument is that the definition of the word income is broad enough to include money that you receive such as a Pension Act benefit, and we want to make it clear that it's not a clawback."

The hearing will continue in Halifax on Thursday.

With files from The Canadian Press