After removing the parameter -XX:+HeapDumpOnOutOfMemoryError did you restart the J2EE stack? I believe it is required. In addition to that have you checked this SAP note?
1865312 - Disabling -XX:HeapDumpOnOutOfMemoryError does not work
Check the SP level of the system and see if you are affected and if yes you will need to patch the system.
Cheers
RB