I've heard of this occurring in pet store dogs who are accustomed to peeing where they sleep on account of being locked in a cage 24/7. Being raised in such a condition causes them to ignore their natural instincts to not make a mess where they nest and can be extremely difficult to correct. When you take him out to pee be sure and praise the hell out of him when he goes where he is supposed to. Same thing with the pee grass setup you have inside. Also would take away his water a couple of hours before bed time so as to reduce the likelyhood that he will need to go overnight in his bed.