Dr. Karen Werner, newly arrived from Germany, irks Nick. Matt demands a detailed report from Nick regarding Liz’s illegal ingestion of the experimental schizophrenia drug. Annoyed over Nick’s caddish ways, John taunts him to the breaking point.

John and Nick’s confrontation escalates to violence at the hospital. Althea and Maggie deduce the two sparring partners after Karen reveals she saw two doctors fighting. Matt threatens to fire Nick.

Althea questions Nick, and later John, about their altercation. Liz notes Nick’s physical injuries, but he remains silent. John wants to know patient Polly Merriweather’s next-of-kin, but she gives him a play script instead. Liz puts things together after seeing John’s injuries.

Ruth Winters attempts to befriend Danny, a new young patient in the children’s ward. Dr. Bill Winters conducts a psychotherapy session with Althea, who speaks of a complicated relationship with her late father. Following a tense meeting with Mrs. Berger at the adoption agency, Bill can’t hide his fears from Ruth.

Bill attempts to help Althea understand her complicated relationships with men. John indulges Polly’s desire to play a scene together. New intern Dr. Steve Aldrich arrives at Hope Memorial and instantly captures the attention of Nurse Carolee Simpson. John is surprised to see his cousin Steve. Althea surprises Nick, who offers a rational marriage proposal.

Matt and Nick clash over Nick’s hesitancy to tell fiancé Liz that Althea is pregnant with his child. Liz notes disapproval from Maggie regarding the engagement to Nick. Nick attempts, but fails, to talk openly with Liz.

John wants to know if Nick has admitted the truth to Liz. Interns Karen and John reach an impasse when Karen refuses to clean exam rooms, as she was a doctor in Germany. Matt and Maggie get to know to Steve. Nick and John face off over the situation with Liz.

On the verge of telling Liz about Althea’s pregnancy, Nick is saved by a call from Carolee. Maggie and Althea reluctantly attend the nursing staff’s wedding shower for Liz; however, Althea can’t hide her discomfort, which unnerves Liz.

After running out from Liz’s wedding shower, Althea loses emotional control, prompting another session with Bill Winters. Liz realizes Althea is still deeply in love with Nick. When Liz tries to force Althea to admit her love for Nick, Althea reacts angrily.

Matt attempts to advise Liz about her personal relationships. John and Matt agree that Polly’s illness is terminal. Matt confides in Maggie the hospital board’s decision to fire Althea, using a morals clause in her contract.

Karen’s attitude rubs Carolee and Althea the wrong way. Matt informs Althea of the hospital board’s decision to dismiss her from Hope Memorial. Althea is enraged when she learns she must leave because she’s pregnant and unmarried, but Nick won’t be punished for fathering her child.

The holiday season begins at Hope Memorial. Althea and Maggie discuss the unfairness of her dismissal. Maggie tips off Nick to the situation between Althea and the hospital board. Althea reaches a decision about quitting before being fired.

John oversteps boundaries with Althea. After examining Polly, Steve realizes the gravity of her illness. Since Polly must remain hospitalized through the holidays, John cheers her up with a Christmas tree and a gift. Liz rejects Althea’s insistence that she’s no longer in love with Nick.

Liz pressures an indecisive Nick about setting a wedding date. Carolee is charmed completely by a Christmas gift from Steve. Althea has no choice but to give Matt her resignation. Liz pushes Nick to the breaking point.

Having broken their engagement, Nick must explain to Liz the lurid reason why. Matt informs Althea of Nick’s latest actions. A bereft and tearful Liz needs comfort from a sympathetic Maggie.

The staff at Hope Memorial exchange Christmas gifts with one another. Maggie prepares to visit her family in Wyoming, but Matt chooses to stay at home with Karen. Ruth and the rest of the hospital staff organize a very merry Christmas for orphaned patient Danny.

John becomes annoyed with Steve, who reveals his not so altruistic reason for charming Carolee. Karen enjoys Maggie’s absence, while Matt feels very lonely with his family away. Later, Karen and Matt discuss their shared past in Germany.

Liz makes a rash decision regarding her work in research lab. Carolee insists Liz share her apartment instead of moving into a hotel. Steve receives an assignment to work with Nick, who takes an instant dislike to the spoiled rich boy.

Liz and Carolee share a bottle of brandy and stories of young love, prompting a tearful Liz to confess Nick has left her for a pregnant Althea. John panics when Polly face a medical crisis. Karen saves Polly, but viciously derides John’s abilities as a doctor

Althea reacts badly when Nick tells her they’re free to marry and raise their baby together. Matt wants answers after learning about Polly’s medical emergency and the trouble between John and Karen. Nick experiences difficulty being the type of man Althea wants.