There was one in Montreal. It doesn't happen a lot, but it happens. Always has. The Montreal case was really lame because the poll worker phoned in to election central, and all incidents had to be reported to the two lawyers they had on hand the whole day. Its pretty tough to convince a voter everything is fine with a "ballot not read" message on the screen. The lawyers insisted that the ballot box could not be opened to try to retrieve the ballot. The voter was issued another ballot. Of course, the lawyers asked me what they were going to do in a recount. I explained with my usual charm that they would be off by one, at least.
The problem can't be fixed without making a fairly major change to the ballots, namely a wider catch zone. Even with a 1/2" or 3/4" zone it would be hard to guarantee success, but it would help. A total solution would probably require hardware changes, especially if we want to keep the existing zones. It was brought up years ago but a don't ask don't tell policy was adopted instead. Sometimes this is referred to as the "maybe it was ripped" policy.
One more interesting thing to note: the AccuVote knows that it has dropped the ballot. So the question has always been, should we increment the card counter, and should we log the event. Currently we do neither. There are two schools here. One says we should notify the voter, log it, add a dropped ballot counter, send an incident report to the secretary of state, etc etc. The other is to increment the counter and send the voter on their ignorantly blissful way. Right now we kind of split the difference.