First things first, if I am wrong I will be the first to apologize. Not sure how that could be proven to me but I will.
From your comment you mentioned a high rate of retiring pilots have VA disability - I can see that. Heck, I was in the Navy and I swear my hearing has never been the same. Perhaps I could receive some disability for hearing loss and one bad cut I took on the head. I would then have to report those disabilities and perhaps it would have prevented or limited my aviation medical.
But
@Pete Hope indicated it was PTSD related. So I am not sure how many retiring pilots have VA disabilities for PTSD. I think that, along with being a new poster and not being entirely clear of the flying relationship with the other pilot gives this thread a feeling of jealousy, revenge, spite, etc.
I know this will sound selfish, but in this particular case I hope I am right. That the pilot isn't really having any of the indicated issues, etc.
If I am wrong that means someone with a decent aviation career is about to hit a big wall, not fly for a while and have to work through a lot of stuff in the system.
You know if the OP's story started like this:
"Hi everyone, I am a pilot and my friend is a pilot. I'm bummed that I might need to report my friend. He currently has a 80% VA disability, the majority being for PTSD. The fact he doesn't report it on his medicals bothers me. But what actually worries me is that I am seeing issues [at home|at work|etc] and I am now quite concerned about his safety and those that fly with him. We work for a major airlines but I will not disclose that. So this is larger than just 2 pilots in GA aircraft. What would you guys do? Not sure if I should talk to him first, let the company know first or go right to the FAA..."
...then it would have sounded more genuine and actually concerned vs the tattling vibe.