A lot of 204 Rugers won't shoot the longer heavy bullets, 32-33gr seem to be best in the 1:12" twist, some shoot 40gr, some won't, if you're shooting 40gr you might want to switch to a lighter bullet. I'd check the mounting first tho, make sure the scope rail is mounted solid per the FAQs, replace the scope with a known good scope, read the Handi Basics sticky to make sure you've covered all the basics of shooting a Handi, shooting without the forend on will tell you if the forend fit is the problem, while the forend is off, check the barrel for looseness, lots of things to check before returning it to H&R for repair.
Tim