In the case of Pomona resident Xavier Alvarez, the justices engaged in spirited debate over the constitutionality of a 2006 law aimed at curbing false claims about military exploits.
Some justices said they worried that upholding the Stolen Valor Act could lead to other limits on speech, including laws that might make it illegal to lie about an extramarital affair or a college degree, or to impress a date.
"Where do you stop?" Chief Justice John Roberts asked at one point.
But Roberts later joined other justices in indicating that the court could make clear that, if it upheld the law, it would only be endorsing an effort to prevent people from demeaning the system of military honors that was established by Gen. George Washington in 1782.
The Obama administration's top Supreme Court lawyer, Solicitor General Donald Verrilli Jr., defended the law as targeted to "protect the integrity of the honors system."
Justice Sonia Sotomayor seemed the least willing member of the court to accept the administration's argument. She disputed that the value of the highest award, the Medal of Honor, or any others has been diminished because some people lie about having received them.
Sotomayor said the issue provokes a justifiable emotional reaction, but said previous Supreme Court cases make clear that taking offense by itself is not enough to justify limiting speech.
"So outside of the emotional reaction, where's the harm? And I'm not minimizing it. I, too, take offense when people make these kinds of claims, but I take offense when someone I'm dating makes a claim that's not true," said Sotomayor, who is divorced.
On the other side was Justice Antonin Scalia. "When Congress passed this legislation, I assume it did so because it thought that the value of the awards that these courageous members of the armed forces were receiving was being demeaned and diminished by charlatans. That's what Congress thought," Scalia said.
Jonathan Libby, the federal public defender arguing against the law, said Congress' intent is hard to discern because it passed the legislation without any hearings.
Alvarez, Libby's client, was one of the first people prosecuted for violating the Stolen Valor Act. Alvarez, then a board member of Three Valleys Municipal Water District in Pomona, introduced himself at another water board's meeting by saying that he was a wounded war veteran who has received the Medal of Honor.
He never served in the armed forces.
Libby said public exposure of lies about military medals is preferable to prosecution. Alvarez "still was exposed for who he was, which was a liar," Libby said.
The two federal appeals courts that have considered the issue have come to different conclusions. The 9th U.S. Circuit Court of Appeals in San Francisco struck down the law in Alvarez's case. The 10th U.S. Circuit Court of Appeals in Denver upheld the law in the case of another false claim of military valor.
Alvarez is in state prison on a different conviction. He was convicted of defrauding the Three Valleys district when he registered his ex-wife for health benefits.
Libby said he last spoke with Alvarez a few weeks ago.
"He's scheduled to be released sometime in March," Libby said. "He seemed fine."
Civil liberties groups, writers, publishers and news media outlets, including The Associated Press, have told the justices they worry the Stolen Valor law, and especially the administration's defense of it, could lead to more attempts by government to regulate speech.
Veterans groups are backing the administration.
A decision is expected by late June.
"The justices questioned both sides pretty hard so you know it will be very interesting to see where they come out," Libby said. "I certainly remain hopeful (that he will win)."
The case is U.S. v. Alvarez, 11-210.
The Associated Press and Staff Writer Wes Woods II contributed to this report.