"They basically said that they aren't going to continue to give him sickness benefits because they don't have any proof that he's actually going to die soon," Julia Mjörnstedt, secretary general of cancer patient support group Ung Cancer told the Nyheter24 news website.
Mjörnstedt was contacted on Monday by the distraught 23-year-old who explained that he had been told by doctors that he had only weeks to live and thus wanted to spend his remaining time at home, rather than in hospital.
But caseworkers at Sweden's National Social Insurance Agency (Försäkringskassan) interpreted the man's discharge from hospital as a sign that his condition was improving.
"When he tried to renew his application for sickness benefits, they told him that if he can move home then he's not sick enough," Mjörnstedt told the TT news agency.
Mjörnstedt then contacted the agency on the 23-year-old's behalf to contend their decision to deny him benefits.
"Then they said that they needed written proof with a date indicating when he was going to die. It was the strangest thing I'd ever heard. No doctor can write something like that," she told TT.
Following a flurry of media attention on the matter, the agency later apologized, calling the matter a "misunderstanding".
"We are terribly sorry about what happened, but we can't say more out of respect for the family's privacy," Cecilia Udin, the agency's national insurance coordinator, told Nyheter24.
While the agency has since reversed its decision and agreed to grant the 23-year-old sickness benefits, Mjörnstedt remains critical of Sweden's social insurance system which she claims "doesn't work".
"To continually use 'misunderstanding' as a solution simply hides the symptoms," she said in a statement, adding that attempting to punish a single caseworker or office is akin to "putting a Hello Kitty bandage on a deeply infected wound".