I'm not sure what the card was called but but someone in my group played a card that removed all wounds from a character. They played it after an enemy had done like five wounds taking their character to a minus health effectivley.
Is that allowed or doeas a character/hero instantly die if they take wounds equal to their health?
Depends, you should find that card for us to find out if it can be correct. If the card is an action then certainly not. If it is a response, is should be specific about when you can use it.
But I can't tell you if you're not more specific.