Some sick and disabled people have been getting the benefit for a year
Citizens Advice Scotland (Cas) says it has been "flooded with complaints" about the new Employment Support Allowance (Esa) benefit.
Cas made the claim a year to the day since the system replaced Incapacity Benefit and Income Support for people who are sick and disabled.
It said the system had caused "misery and frustration" for vulnerable people.
But the minister for disabled people Jonathan Shaw said the Esa was designed in partnership with disability groups.
Esa claimants have to undergo a work capability assessment to determine whether they can claim the benefit.
Citizens Advice said reports gathered from its offices across Scotland showed a consistent "catalogue of errors".
It said many claimants have been judged ineligible, despite clear evidence from their GPs that they are not fit to work.
Others have experienced delays with payment, because of "red tape" in the system, and have been driven into debt, it said.
Mr Muir saw his colleague being killed in Iraq six years ago
Kaliani Lyle, Cas chief executive, said: "Far from simplifying the system, the Esa has made matters much worse.
"It has created barriers to entitlement, and caused unnecessary financial distress and emotional strain to sick and disabled people all over Scotland.
"And this is not just a few isolated cases. Evidence from CABs throughout the country shows a catalogue of errors, from the first day the system was introduced right up until the last few weeks."
The BBC spoke to a former serviceman Andrew Muir, who witnessed his colleague's death when their unit was attacked in the Iraqi city of Basra in 2003. He still bears the psychological scars.
"When I left the Army I found it hard to settle back into civilian life," he said.
"I started to get nightmares and when I went to the doctor they deemed me to have Post-Traumatic Stress Disorder.
"I tried to commit suicide on quite a few occasions because I couldn't cope with the flashbacks and nightmares."
When Mr Muir applied for Esa, he said his poor mental health was not taken into account in his assessment and his problems did not come to light until the appeals process.
Ramsay Norman, an appeals expert for Cas, said he has seen many similar cases.
"This medical was meant to be for Andrew's mental health problems. In total, it lasted six minutes," he said.
"And all it actually did was go through physical descriptors, it didn't actually cover the mental health descriptors which Andrew was suffering from.
"This is happening far too often, where the medicals appear to be rushed."
The work capability assessment is carried out by a private company, Atos Healthcare.
A spokesperson for the company told the BBC: "We provide independent advice and conduct a medical assessment on behalf of the Department for Work and Pensions.
"The duration of each assessment varies from person to person, depending on individual circumstances.
"The medical assessment for every claimant covers physical as well as mental, cognitive and intellectual abilities, ensuring that the disabling effects of mental health conditions are fully considered."
The UK government minister Jonathan Shaw defended the changes, saying they had created "a more proactive system".
"The Esa assessment was designed in partnership with a number of disabled organisations, because they agreed with us that we should be looking at what people can do, rather than what they can't do and writing them off," he added.