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I won't go into details either, but we've been down this road before with other family members and I'm eternally grateful that one took himself off the road voluntarily, and that the other just plain lucked out and never had an accident. We tried with him, oh, we tried but failed.
Part of the problem is...there are WAY too many states that don't REQUIRE retesting of the elderly. There would be far fewer tragedies like your own if every state had mandatory retesting.
When I first moved here in June to live with her, she asked me to take her to the doctor's office as "they have my paperwork to get my DL back." So we went, the nurse practitioner said to me "I can't recommend for this" and I replied, "so tell them that she needs full retesting, she'll never pass the eye test, written AND road test." She agreed as how that was right, no way would my mom pass all three tests, and wrote her recommendation like that.
Fast forward to today - my mom continually asks me to take her to DMV to get her license back. I tell her, "I can't do it today, maybe tomorrow" and when tomorrow comes, she's forgotten about it. I don't volunteer.
That said, eventually, I WILL have to take her and I will, and I'll go in with her. But her paperwork's a disaster, I won't help her with that at all, I won't help her with anything other than to take her. I'll go in, only to hear first-hand what they say to her - because she won't remember the next day.
Maybe a variation on this would work in your case, I don't know. It might be another option for you to try. Good luck - I feel for you.
Try repeating the same answer, over and over and over. "It's the law, dear, and we can't do anything about it." Have everyone in the family use the same line.
Unfortunately since he has dementia reasoning with him is not going to be very effective. So try just repeating a very simple statement that there is nothing that can be done, and then try to change the subject ... redirecting him to something he might be interested in.
I am so sorry that your fragile mother is often on the receiving end of his tirades. You could try having a talk with him about your mother. "Dad, Mom isn't as strong and healthy as she used to be. It is the law that you can't drive and she cannot do anything at all about that. It upsets her when you bully her about this. She would do anything she could to help you but she cannot do anything about this. Please don't make her feel bad and upset her." Whether Dad could accept this, or remember it the next time he has an outburst, remains to be seen. A talk with him about mother may not help at all, but it couldn't hurt.
Best wishes to you as you struggle with this difficult challenge. And if you find something that works ... share! We learn from each other.