The team's attempt to recoup signing bonus money through a grievance filed late last year was turned down by an independent arbitrator on Tuesday, Packers president Mark Murphy confirmed to ESPN at the NFL scouting combine.
Murphy said the Packers can appeal to a panel, and they will discuss whether to do so.
The Packers gave Bennett a $6.3 million signing bonus as part of a three-year, $21 million contract signed last March. He played in only seven games before the Packers released him with the designation that he failed to disclose a medical condition. ESPN first reported in November that the team filed a grievance against Bennett.
Bennett was inactive for one game because of a shoulder injury before the Packers released him. He later said he received medical opinions from multiple doctors saying that he needed surgery. Bennett also disputed that he withheld any injury information and claimed that Green Bay's medical staff forced him to play.
The New England Patriots then claimed Bennett off waivers, and he played in two games before he went on injured reserve.
Murphy said the arbitrator's decision was based in part on Bennett being claimed off waivers.
"The key issue was the fact that the Patriots picked up his contract," Murphy said Tuesday.
The Packers now must count the remaining $4.2 million of Bennett's pro-rated signing bonus on their 2018 salary cap.