Either he has tankmates that are picking on him or perhaps he has irritating parasites that have led to rubbing up against objects and causing the scales to be dislodged. You may need bacterial meds in case it gets worse, possibly in addition to parasite meds

How would parasites get introduced into a closed environment? They get pellet food and no live or frozen or anything.
The way they carry on I think they are just being too rowdy.
All fun and games till someone loses some scales.

I doubt it's a parasite, the area will heal but just make sure to keep up with the water quality so he/she doesn't develop any kind of bacterial or fungal infections. If he/she does develop problems use some medication.

If you think it was the decor in your tank that harmed them, like lava rock, I'd take it out ASAP. Silver dollars are sooooo skitish and will crash into things very easily.

Silver dollars are sooooo skitish and will crash into things very easily.
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Ain't THAT the truth. Silly things. Lucky for them they're nice looking fish.
Well I used Melafix for 4 days as said on the instructions and the fish is looking fine now. Thanks for responses folks.