Defense Secretary Leon Panetta (Blade photo by Michael Key)

A federal court on Monday approved a settlement that will allow gay service members discharged because of their homosexuality to receive full severance pay.

The American Civil Liberties Union said that it reached the roughly $2.4 million agreement on behalf of more than 180 service members who signed onto a class action lawsuit who received only 50 percent of their separation pay when the military discharged them. This policy took effect in 1991, two years before “Don’t Ask, Don’t Tell” took effect.

The settlement the ACLU reached with the Pentagon only applies to those discharged before Nov. 10, 2004, because of the statute of limitations.

“It makes no sense to continue to penalize service members who were discharged under a discriminatory statute that has already been repealed,” Joshua Block, staff attorney for the ACLU Lesbian Gay Bisexual Transgender Project, said. “The amount of the pay owed to these veterans is small by military standards, but is hugely significant in acknowledging their service to their country.”

The ACLU in 2010 challenged the policy on behalf of former Air Force Staff Sgt. Richard Collins who was discharged under “Don’t Ask, Don’t Tell” in 2006 after a co-worker at Cannon Air Force Base in New Mexico saw him kiss his boyfriend in their car while they were off-base.

“This means so much to those of us who dedicated ourselves to the military, only to be forced out against our will for being who we are,” Collins said. “We gave all we had to our country, and just wanted the same dignity and respect for our service as any other veterans.”

“There was absolutely no need to subject these service members to a double dose of discrimination by removing them from the armed forces in the first place, and then denying them this small benefit to ease the transition to civilian life,” Laura Schauer Ives, managing attorney for the ACLU of New Mexico, added. “This decision represents a long-delayed justice to these veterans.”

The ACLU announced the settlement hours after President Obama nominated former Nebraska Sen. Chuck Hagel to succeed Defense Secretary Leon Panetta — his selection sparked controversy among some advocates who have criticized him for his anti-LGBT voting record on Capitol Hill and for describing James Hormel as “openly, aggressively gay” during a 1998 newspaper interview about his nomination to become the U.S. ambassador to Luxembourg.

Hagel apologized for his comments.

Former chair of the Joint Chiefs of Staff Adm. Mike Mullen and U.S. Marine Corps Commandant Gen. James Amos are among the military commanders who have said the integration of openly gay men and lesbians into the armed forces has gone smoothly since the repeal of “Don’t Ask, Don’t Tell” became official in September 2011.

Problems, however, remain.

Transgender servicemembers remain unable to openly serve, while the Defense of Marriage Act prohibits the military from providing on-base housing, survivor and other spousal benefits to same-sex partners of gay soldiers.

Servicemembers Legal Defense Network in October 2011 filed a federal lawsuit against DOMA on behalf of Chief Warrant Officer Charlie Morgan, a lesbian guardsman with terminal breast cancer who led the Pledge of Allegiance at New Hampshire Gov. Maggie Hassan’s inauguration on Jan. 3, and other gay service members and veterans. The Southern Poverty Law Center last February filed a lawsuit against the U.S. Department of Veteran Affairs on behalf of a disabled veteran from California whose application for spousal benefits for her wife whom she legally married outside Los Angeles before voters in 2008 approved Proposition 8 that banned nuptials for gays and lesbians.

The U.S. Supreme Court is scheduled to hear oral arguments in cases challenging both Prop 8 and DOMA at the end of March.

The Obama administration announced in February 2011 it would no longer defend DOMA, but House Republicans continue to back it.