Lawmakers condemned the practice, and more than 250 signed on to sponsor legislation designed to right the wrong. They promised to rein in the heartless government bureaucrats who dared to implement a policy that could snatch soldiers' money away like this.
Problem is, there doesn't appear to be much of a problem.
Only a handful of cases have been found in which a wounded soldier was asked to repay a bonus, and those turned out to be clerical mistakes.
But Iraq is such an emotional issue that initial reports of mistreated veterans put many in Congress into a state of high dudgeon.
"It's just a disgrace," said Sen. Charles Schumer, D-N.Y., estimating that the policy affected hundreds of veterans in his state alone.
"Unthinkable," said Sen. Jeff Sessions, an Alabama Republican.
It "shocks the conscience," said Sen. Hillary Rodham Clinton, D-N.Y. "This policy is outrageous and should be reversed immediately."
Those watching such developments say the problem appears to have been wildly overstated.
"We're six years into a war. The military's been paying enlistment bonuses for a while, and we would have heard a lot about it" if it were happening, said Joe Davis, a spokesman for Veterans of Foreign Wars. "There are other issues that are more important for the Congress to be taking up."
The Pentagon says it has received just two complaints on the issue since a "wounded warrior" hotline was set up this summer.
Pentagon policy and practice for at least 20 years has been to fully pay enlistment bonuses to soldiers forced to leave the military early for reasons beyond their control, such as a combat injury, according to Bill Carr, deputy undersecretary of defense.
Administrative lapses have occurred, however.
Most recently,, who was partially blinded by a roadside bomb in Iraq, was mistakenly sent a letter asking him to repay $2,800 of his enlistment bonus. A similar case, involving a veteran whose bonus payments were cut off, was found by a presidential commission formed earlier this year to recommend improvements in veterans' care.
In both instances, the Pentagon said the problems were administrative errors that would be corrected.
Fox, it turned out, would not be asked to repay his bonus.
Despite that, lawmakers have rushed to respond.
A bill was introduced in the Senate on Monday with sponsors including Clinton and fellow presidential candidate Sen. John McCain, R-Ariz. In the House, members stepped up by the dozens after hearing Fox's story to sign on as co-sponsors of a similar bill introduced in October by Rep. Jason Altmire, D-Pa.
Susan Hosek, an economist at the Rand Corp. think tank who was the presidential commission's research director, said the commission was satisfied with the Pentagon's response.
"It certainly didn't rise to the level of an important issue in our work," Hosek said of the panel, headed by former Sen. Bob Dole and former Health and Human Services Secretary Donna Shalala. "If it had, we would have made sure that it was highlighted in our report ... we literally only heard about it once that I know of."
The commission did not mention the issue in its final report, but did discuss it with Defense Department officials and suggested that the policy be worded more explicitly. The Pentagon implemented the revised wording in September.
Paul Rieckhoff, executive director of the Iraq and Afghanistan Veterans of America, which pushed for the legislation, acknowledged that his group knows only of a few complaints. But he said the legislative effort will keep the Pentagon on its toes and highlight the bureaucratic hassles that veterans face when they return home.
"I would rather have them focus on the fact that the Veterans Affairs budget is late. I would rather have them focus on traumatic brain injury," he said. "But in general, this kind of problem does raise awareness that the bureaucracy for everyone is still too difficult."