I think in this case, Word has successfully identified the subject and its units.
"In Battle Royale, a group of high school students are forced to choose a weapon before being sent to battle each other to the death."
In this sentence the is/are is in reference to a "Group" of students. In this case the use of "group" denotes a party of more than one however when referencing the "group" one would treat the word as a singular unit (afterall, there really is only one group).
Consider the sentence:
"That group is big."
"That group are big." -> To me, the use of "are" here seems awkward because the word "group" is treated as singular rather than plural.
-to use "are" in this case one would have to reformat the sentence as such:
"those groups are big."