Good question, Ambien has even more side effects on the elderly, and what he is enduring fits.
I agree, for this to only happen when he lies flat warrants a doctor's visits. At first I thought it might be night terrors which I had at one time, and you do wake up very scared and disoriented, but this is a little different and I think it would happen regardless of how he slept. Do keep us posted.
This one has me stumped! The fact that this apparently only happens when he lays flat makes me wonder if it isn't some kind of inner ear problem? Has he tried sleeping in his recliner at night to see if that helps? It does sound like laying flat causes some disorientation, and that would cause some concern for me.
You could try having him sleep in the recliner for a few nights, or you could try elevating the head of his bed at least 30 degrees. If neither of those things brings any relief, I would say it's time to get your dad to the doctor for a good physical.
Let us know how things work out, OK?
Peace
Greenlydia