@sniedinger
This is not a bug, it's the way conditional statements work. If the condition (it's a group assignment) isn't true, then it doesn't matter what follows so you shouldn't rely on it.
In other words, Canvas is saying that the grade_group_students_individually flag is only usable when it's a group assignment and should be ignored otherwise. That is the way that it behaves as well. You should only check grade_group_students_individually after checking for a group assignment.
A bug would be if it was it was a group assignment and the checkbox to grade students individually was checked but it was still false.