OK, upon review: His knee was NOT down. However, his shin almost certainly was. As I recall from earlier today 1 shin = 1 knee. So he should have been down.
Initially, I thought the ball came out when he hit it on the ground. It actually came out of his hand just inches above the ground. So, the ground did not cause the fumble.
It would have been a close review and I would never expect the Refs to give the Bills a call. But, IMO, his shin was down when the defender was pulling him back.
Regardless of the outcome, Jauron still should have challenged it.