I receive a teacher's pension and social security and the state withholds. I have always received a refund from the withheld taxes.
let's say the mediation award was because the FA put you into bad investments on which loss money or inappropriate investments on which you lost money . the award is to compensate you for the loss. assuming you deducted the losses, which you should, then the award is taxable.
if your situation is different please explain.