The officials in Feixian county of Shandong Province were left in a fix after the sudden death of Guo Ruijing who died of fright.
A video clip that went viral online claimed that Guo, mother of twin girls and a son, "died Tuesday after being levied a fine of about 200,000 yuan (USD 32,180)", state-run Global Times reported.
China adopted a one-child policy in 1980 to curb the rapid growth of its huge population.
The policy was relaxed recently to permit the second child if the husband and wife hail from one child family.
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Guo's mother-in-law said six family planning officers had threatened to abort her third child in February last year.
However, authorities claimed that no brutality or intimidation took place.
Only Guo's husband Zhang Changgui was at home when local family planning officials came to their house to investigate violations, the daily report said.
The government said Guo suffered from schizophrenia but the cause of her death remained unknown.
The authorities said that Guo illegally gave birth to the twins in February 2013 before the couple registered for marriage in May 2013, and that their third child was born in March 2014.