Thanks for the additional information.
I can understand why you might think allergies would be responsible for his behavior but if he's not scratching, licking or digging at his body, then this is less likely.
My dogs dig and scratch at their beds all the time, trying to "rearrange" them into a better position which is more comfortable...or at least this is how I always interpreted the behavior, especially if the bedding is new. But it is a little uncertain as to why Grady would now start this behavior if he's never done it before. If by any chance, you've recently purchased a new bed for him which correlates somewhat with this behavior, then I might consider this to be why he's acting this way. Perhaps there's something about the smell or texture that troubles him.
If something like I mentioned above seems less likely to you as an explanation, then there may be an underlying medical reason for it. When older dogs start behaving in somewhat unusual ways, then several possible explanations come to mind:
1. Cognitive Dysfunction which is similar to Alzheimer's in a human. Usually these patients are showing other signs such as the ones that I asked you about.
I have a fairly long list of supplements and one drug which I can list is you'd be interested and if you think this might be playing a role. But regardless, one supplement which is one the list and I'd suggest which may help him sleep better through the night would be human, over the counter Melatonin. The dose would be 3 mg about 30 minutes before bedtime. For some patients, it may take several weeks before effects are seen although these products don't work in every dog. Since quality control issues abound with supplements, I recommend Nature's Bounty which is a good manufacturer.
2. Dogs with hypertension can behave in some odd ways. Since he has a past history of heart issues and if his blood pressure hasn't been measured recently, then this might be something to consider.
3. When they start to behave in seriously odd ways, then a brain mass may be responsible. I wouldn't consider this behavior to be that abnormal but just wanted to include this possibility on the list to be complete.
If he were my dog, I probably wouldn't be too concerned about this behavior except for the sleep disruption. If he'll sleep through the night (if the Melatonin is effective), then perhaps it will be less troublesome for you.
I do think that this behavior can become a habit over time; redirecting his attention (taking him for a walk, for example) during the day when he does it may help to reduce its frequency.
I hope this helps. Deb