Weird Freshman Play

I'll try to do the scenario some justice, but if it isn't clear, I'll be happy to make clarifications. The scene:

4th down (and I can't remember how many yards) for A, and they decide to punt. The punter somehow punts it so it never really left the ground, and the ball becomes loose behind the LOS. While the ball is loose, white hat throws a flag for a block in the back on B57, in A's backfield. B recovers the loose ball and gains possession just short of the LOS. Since PSK didn't apply because the kick never went past the LOS, the white hat marked off 10 yards from the spot of the foul and awarded possession to B.

I believe the white hat had it right, even after bringing the whole crew in to figure it out, but wanted to see what comments, if any, folks on the board had. Thanks.