Cannot get rid of "physical connection is not usable" exception

We have an ASP.NET MVC 4 web app that uses SQL Server 2012 and Entity Framework as ORM and Unity for IoC. Web app is hosted on Amazon EC2. I started getting "Physical connection is not usable" exception. It happens few times a day. I searched many articles and forums and tried all the possible suggestions:

• Tried removing pooling from connection string "Polling=False"
• Tried limiting pool size and connection lifetime
• Tried changing LifetimeManager of Unity to HierarchicalLifetimeManager, PerRequestLifetimeManager. Also made sure entities context is disposed after the end of request
• Removed all TransactionScope references

When this exception happens, the only way to restore application is to restart server, which is very bad!

This is full exception:

A transport-level error has occurred when sending the request to the server. (provider: Session Provider, error: 19 - Physical connection is not usable)

I confirm now, by changing connection string on the server to use "." for data source instead of domain name, exception seem to have disappeared. Very weird as domain name used to work before. Must be some sort of update on SQL Server