I wouldn't really call it disappearing, it pretty much well and did exactly what anyone would expect it to do if everyone passed on it... hit the floor.

Not calling you dumb or anything, and sorry you lost the item but yah, everyone in zone Passes item > Item drops to floor. Seems like par for the course. I'd say next run just have someone not pass the item if you DC so if you don't make it back at least someone gets it. I've encountered this type of mechanic in every MMO ever. If all available players pass the item it hits the floor like someone threw it on the ground in slowmo