It happened to us a couple of times last night.
Generally we didn't treat it any differently to any other hit. The rules state you only remove teeth if you knock them down; since the monster is still up you therefore don't remove teeth*. The opponent's monster is simply moved to it's new location.
* Unless of course you manage to knock them off the board.
If an opponent has knocked your Paws out of the city, place them on an
empty starting area of your choice at the start of your next turn, place
the Body on the Paws, then take your turn