Benefit-assessment company Capita is going to court to try to reverse the "reputational damage" it says it suffered after a claimant died.
Victoria Smith died months after her personal independence payments were stopped following a Capita assessment.
The outsourcing company was ordered to pay £10,000 in damages over its handling of her disability claim.
It was found to have made incorrect statements but wants the county court verdict set aside and the case reheard.
The company conducts health assessments for personal independence payments (PIP), the main disability benefit, on behalf of the Department for Work and Pensions.
While the decision over whether someone receives the benefit is made by a DWP official, Capita's assessment of how a person's disability affects their life is a crucial part of the process.
'She gave up'
A Capita healthcare assistant came to assess Ms Smith in March 2018.
The 33-year-old, from Market Drayton, in Shropshire, suffered from agoraphobia and fibromyalgia, which left her body in constant pain.
The Capita employee found Ms Smith did not score a single point in the test - and the DWP stopped her benefit.
In February 2019, her mother, Susan Kemlo, told BBC News the decision had "destroyed her".
"When they took away her ability to look after herself, to have a way of life, she gave up," she said.
Ms Smith died of a brain haemorrhage in July 2018 but doctors told the family her underlying conditions, particularly the fibromyalgia, had deteriorated as well.
The week after her death, a social security tribunal decided she had been eligible for PIP.
Furious with the conclusions the Capita employee had reached, Mrs Kemlo took legal action against the company for maladministration - in essence making inaccurate statements - and was awarded £10,000.
"I didn't do it for the money," said Mrs Kemlo.
"I did it for them to admit they were wrong, to get some justice for my daughter, because [it's] only ever been about justice for Victoria."
But Capita is now going to court later this month to try to set aside the judgement.
At a hearing scheduled for Telford County Court, the company will argue it never had a chance to defend the case because of problems in its own internal mail system.
In court papers, Capita "acknowledges that it has not been able to explain the default and therefore cannot provide a good reason for it" but says its failure to respond to the court was "entirely innocent and inadvertent".
Capita also stands by its employee's assessment of Ms Smith, describing it as "fit for purpose, accurate and medically justified" and says the family's claim is therefore "without merit".
If the court refuses to set aside the judgement, the company says, "the prejudice to Capita… is extremely significant".
"Capita has been on the receiving end of significant negative press which suggests that it has been held liable following a successful claim by the claimant," it says.
"This causes significant reputational damage to Capita's business."
The court action by Capita has been condemned by Duncan Walker, a welfare rights adviser with Unite the Union, who has been supporting Mrs Kemlo since her daughter's death.
"In the tragic case of Victoria, this was just one more example of shocking maladministration by Capita at public expense.
"Every Pip case undertaken by Unite members in Stoke-on-Trent with the specific health care professional in Victoria's case has been overturned by the social security tribunals.
"It is an abuse of public funds and plainly wrong that such... reports are presented as fact and a shameful indictment of the government welfare reform ideology clearly persecuting disabled and vulnerable people." said Mr Walker.