Skeletal mesh jerks backwards when moving capsule component back to skeletal mesh with physics enabled

If a skeletal mesh utilizing a capsule component has physics enabled to ragdoll, when the capsule is moved back to the mesh the mesh will jerk backwards towards the capsule briefly.

1. Download and unzip project from link:

[Link Removed]

2. Open project
3. Press PIE
4. Press F to enable physics
5. Press F again to reset the capsule to the mesh

Results:

Skeletal mesh jerks towards capsule briefly.

Expected:

Capsule moves back to skeletal mesh, mesh does not move backwards.