This is a partial transcript of The Big Story With John Gibson, March 2, 2004, that has been edited for clarity.

JOHN GIBSON, HOST: Scenes from Iraq and Staff Sergeant Ryan Kelly lost part of his right leg towards an artillery shell in Iraq. Now he wants to be financially compensated as a victim of terrorism since his injury happened after the declared end of major combat. Heather Nauert is here with his story.

HEATHER NAUERT, FNC CORRESPONDENT: That's right. Sergeant Kelly is an Army reservist from Texas. He is one of at least 2,700 soldiers who suffered injuries in Iraq. He is the very first member of the military to file a lawsuit claiming that he is a victim of terrorism, not war. He joins us now from Washington. Sergeant Kelly, today's big question. Are wounded soldiers victims of war or terrorism?

STAFF SGT. RYAN KELLY, U.S. ARMY RESERVIST: That's a good question. I believe, like my case shows, that I feel like I was a victim of terrorism and not combat operations, because I feel on July 14th combat operations had ceased and we were in operations other than war status.

NAUERT: And July 14th was the date in which your accident, your injury actually took place, is that correct?

KELLY: That's correct. On July 14th, terrorists detonated three artillery shells next to a vehicle I was riding in. And I had my leg nearly completely amputated.

NAUERT: Let me just play devil's advocate and ask you this, because some would argue that you are a volunteer, and you knowingly joined our army knowing that you could get called up and that, unfortunately, these injuries do take place. And that the government has done things for you that should not necessarily include compensating beyond what the government has already done for you.

KELLY: That's a good question, Heather. The fact is, though, the federal government does provide, you know, definitely compensation for my loss of my leg. In reality, there's a lot of gaps that aren't filled.. And that's kind of the idea behind applying for the State Crime Victims Fund (search). Not just for myself but just to help fill in those gaps where the federal government doesn't provide coverage.

NAUERT: OK. Let's back up and fill folks in on exactly what you are doing. The state of Texas where you are from has a victims compensation fund, and as I understand it, all states, in fact, have this. Now, you applied to this victims compensation fund twice. You were turned down, and then you filed suit against the state of Texas for $150,000. Now, according to folks in Texas, the legislators, they say that their law only covers civilians and not service members when they're serving overseas. They would argue that they're keeping within the spirit of the law in Texas.

KELLY: I think that goes against how the statute was created. The state of Texas writes legislation all the time putting in act of war clauses, and military clauses and civilian insurance policies, for instance. Yet, in the creation of this statute, they didn't introduce the military clause. And by that fact I think any seriously wounded veteran from the state of Texas should be eligible to the fund as a last resort, you know, to provide that — the compensation where the federal government and the veterans affairs administration coverage doesn't completely cover expenses.

NAUERT: OK. Tell us what life has been like for you since you did get back from Iraq. I know this has been extremely challenging for you, and your family and your wife, in fact, is still over in Iraq.

KELLY: Actually, she's back now.

NAUERT: OK. Excuse me.

KELLY: Yes, it has been very challenging for my family. It took my wife two months to get back after I was injured, and that was difficult. During that time, my mother and other family members came in and stayed with me to help, you know, get me through rehab and get me to and from the hospital and kind of keep my spirits up. That was difficult emotionally on many levels, but it was also difficult financially to my family members to travel back and forth. In most cases, the army only covers for one or two family members one round trip ticket back and forth.

NAUERT: OK, so the military pays your medical bills. It pays you disability for the rest of your life. Exactly how much are we talking in disability?

KELLY: What I have been told is I'm going to merit about 40 percent disability from the army if I retired today with a below the knee amputation. And the VA is going to bump that up to about 60 percent. I'm really looking at about $800 a month disability.

NAUERT: In your view, just real quickly, do you think the government needs to do more for our veterans who have been injured in war time?

KELLY: Definitely, ma'am. I think it's — it breaks my heart when I see my buddies, you know, burning up their savings because their spouses are up here trying to support them, and they're having, you know, their families are leaving work to come up here, but no one is compensating their families to have to leave work to make sure their son with no legs can get back and forth from the hospital and, you know, gets the care he needs. I do think that more needs to be done to support the family group. And I think that this fund is a great way to kind of be an umbrella for those people that fall through the cracks.

NAUERT: All right, Sergeant Kelly, thanks so much for joining us.

And, John, just so you know, some other guys are actually planning on doing this as well.

GIBSON: Well, you know, Al Qaeda is taking credit for blowing them up. Maybe those people who run the fund ought to take a look at who is hurting those guys.

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