The Supreme Court on Thursday narrowed the scope of a federal law that adds two years of prison to various felonies if identity theft is involved, unanimously ruling that the government had interpreted what can count too broadly.

The case centered on a Texas man, David Dubin, who was convicted of overbilling Medicaid for a psychological services firm. Because he submitted an inflated claim using a patient’s Medicaid number, prosecutors convinced a judge that the law on aggravated identity theft applied, and Mr. Dubin received a longer prison sentence.

But in a 21-page opinion joined by seven of her colleagues, Justice Sonia Sotomayor wrote that a defendant’s misuse of another person’s identity must be “at the crux of what makes the underlying offense criminal, rather than merely an ancillary feature of a billing method.” She rejected the government’s more sweeping interpretation that the law lacked any limit.

Under the government’s reading, she wrote, “as long as a billing or payment method employs another person’s name or other identifying information, that is enough. A lawyer who rounds up her hours from 2.9 to three and bills her client electronically has committed aggravated identity theft. The same is true of a waiter who serves flank steak but charges for filet mignon using an electronic payment method.”

“The text and context of the statute do not support such a boundless interpretation,” she added.

Congress enacted the law, the Identity Theft Penalty Enhancement Act, in 2004. It says that for a list of felonies, whoever “knowingly transfers, possesses or uses, without lawful authority, a means of identification of another person shall, in addition to the punishment provided for such felony, be sentenced to a term of imprisonment of two years.”

A House Judiciary Committee report at the time justified it by citing the frequency of identity theft when people opened credit card or utility accounts in someone else’s name and warned that such a tactic could help terrorists. Some Democrats opposed the bill because of the mandatory minimum sentence.

But the law has proved problematic for another reason: Congress left unclear what kinds of misuses of other people’s means of identification should trigger the law. While Mr. Dubin’s case does not fall squarely within an ordinary understanding of “identity theft,” both a district court and appeals court had ruled that it fit within the statute’s text.

Even with the new test established by the majority on Thursday, Justice Neil M. Gorsuch, in a concurring opinion, expressed worry that lower courts would still struggle to interpret the vague wording of the statute. He urged Congress to clarify the law, writing that it alone could fix the matter.

“Until it does, I fear the issues that have long plagued lower courts will persist,” he added. “And I will not be surprised if someday, maybe someday soon, they find their way back here.”

Charlie Savage is a Washington-based national security and legal policy correspondent. A recipient of the Pulitzer Prize, he previously worked at The Boston Globe and The Miami Herald. His most recent book is “Power Wars: The Relentless Rise of Presidential Authority and Secrecy.” @charlie_savage • Facebook

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