As of 09-18-2015 I have a TAC open for this problem. As of 09-23-2015 it's being sent to the Aruba engineering team as a possible defect.
I just heard back from Aruba Support yesterday afternoon 09-24-2015.
It looks like the problem was with AOS version 4.1.1.2
After I upgraded to AOS version 4.1.1.8 blacklisting is working flawlessly.
Thanks again for everyones help on this.