1099 misc is normal

lawsuit awards are TAXABLE.  But for some awards you can deduct it.  Portions of awards that are lost profit, lost income, or punitive damage, cannot be deducted, and will be treated as income.  

http://www.irs.gov/pub/irs-pdf/p4345.pdf

In your case, you want to amend your tax return to include the 1099 misc amount, but you should be able to find a way to deduct it since you paid it before.  Find an accountant or google around for how to do it.