Libel laws in the US are pretty famously tilted towards the defendant. IIRC you have to prove that what they said was false, that they knew at the time it was false, and that they had malicious intent. So "our reporter actually believed it, cause she's dumb and a bad reporter" is a really solid defense in this case.
At the time, it was pretty weird how Fox handled it. There was no public defense of the story from the reporter or any spokespeople, even as other outlets contradicted it, no follow-up stories. They were just silent for a week, pulled the story down, then right back to silence.