Can a tax payer deduct medical expenses that were paid with a lawsuit awarded to taxpayer?
If the award included medical expenses, then they were reimbursed.
So, even if the expenses were paid to the hospital, they are still not deductable?
No. Same as if taxpayer was reimbursed by insurance company. You can only deduct unreimbursed out of pocket medical expenses.
was the settlement taxable income?
Excellent point. Damages on account of personal injury are not taxable.