Health insurance premiums reimbursed by health FSA, how do we correct?

[Guest mfb]

An employee of our client had an individual health insurance plan and received preimum reimbursements from the health FSA. That employee who received the reimbursement is no longer employed with our client. The employee also may have been involved with administering the plan. Now that this has come to light, how can we correct the mistake? What are the consequences to the plan for making these prohibited reimbursements (under Prop Reg 1.125-2, Q/A-7(b)(4))?