The problem was traced down to running our application within our Kubernetes environment. The db2 entries failover configurations declared shortName's of the host names (ex: db2prd) instead of a FQDN (ex: db2prd.example.com). This was causing our environment to not be able to resolve to the failover hosts.

Since the clientRerouteAlternateServerName set on the driver was only used upon startup of the application and once connected the DB2 configurations took over it did not end up mattering what we set here at all, and the configurations were correct. It just took updating to FQDN's on the DB2 configs to resolve this.