To make a claim for injuries which were not caused by the accident in question may be considered a fraudulent claim and in some states can be prosecuted as a crime. The aggravation of pre-existing injuries or conditions is a "new" injury and a legitimate claim.
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An individual driving his/her own car in the course and scope of employment exposes his/her employer to liability for the driver's negligent conduct. In the facts you have given this is an employee, driving her employer's car has an accident during activities in furtherance of her employer's business. Her employer should be included as a defendant in any lawsuit.
In California it is the insurance on the car that is primary. Meaning that your collision coverage will most likely repair your car and under medical pay coverage (your PIP) his bills will be paid not to exceed the amount of your coverage. Here you would also have the right to bring an action against him for negligent driving and seek all of the damage to your car, loss of use, and depreciation caused by the collision. If your insurance had fixed your car then they would have right to...