I do not recommend omitting the form.
Since the payment is recorded on a 1099-NEC, I presume that the issuer believes that the income is taxable income, perhaps self-employment income.
I do not know the nature of the settlement. Perhaps the intent was for the income to be reported and offset by the repayment to Medicare?
I have seen reimbursement of health insurance premiums reported on 1099-MISC box 3. Is your situation similar to that?
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