"Trauma" sounds like a weasel word to mask that there was no physical harm, and hope IRS doesn't notice.  In the inarticulate way that IRS explains it (can you use "only" twice in the same sentence?), 

"As a result of the amendment in 1996, mental and emotional distress arising from non-physical injuries are only excludible from gross income under IRC Section104(a)(2) only if received on account of physical injury or physical sickness."

https://www.irs.gov/government-entities/tax-implications-of-settlements-and-judgments