Things I have noticed from my side, DoTs cast on players while in combat, will report the negative HPs to the group accordingly.

Once combat ends, it appears the health updates stop. My characters at 100% health, cannot be healed by direct heals, they do nothing.

Heal over times and regens (bard) will counter the negative damage to return me back to net 0 health and I'll stand up again.

If I go in combat again, health begins update accordingly and heals land again.

This appears to be any DoT, it just becomes very apparent with the high amount of damage from the ToFS shade DoT.