Around this time, Susan Stewart recruits a new Oakdale Memorial Hospital staffer, Dr. John Dixon, in her campaign to keep Dan from leaving her. The two would briefly date, but John immediately senses that Susan is only interested in him to make Dan jealous and breaks it off with her. John briefly dates Sandy, who soon leaves town with Peter Kane. John does overhear a conversation between Elizabeth and her brother, Ronnie Talbott, about her love for Dan and the baby she had with him.
Dan, meanwhile, is becoming more and more miserable with Susan, and it doesn't help Dan's mood that Susan keeps threatening to tell little Betsy the truth about her parentage. Susan also threatens to name Liz as a co-respondent in any divorce action Dan attempts. Dan loves Liz, but he can't have her since she is married to his brother, Paul.
Liz and Paul, in the meantime, finally consummate their marriage, and Liz becomes pregnant. But Paul and Liz's baby is tragically destined never to be born, thanks to Susan, who one day confronts Liz and falsely accuses her of still carrying on an affair with Dan. Susan's badgering causes Liz to lose the baby. Liz becomes so depressed and so overcome with guilt over losing Paul's baby after giving birth to Dan's daughter that she suffers a nervous breakdown and must be institutionalized. Susan also feels guilty about Liz's miscarriage, and we get to see a more maternal side of her when Paul has her and Dan take care of Betsy until Liz recovers.
Taking care of Betsy makes Susan more receptive to the theory of motherhood. Therefore, Susan once again seduces Dan during one of his off guard moments, and she becomes pregnant with the baby who would become Emily Stewart.
In the midst of all this, Penny Hughes briefly returns to Oakdale, now played by Phoebe Dorin. Immediately, Penny is torn between Ellen and Liz in the family dispute over Dan's marriage to Susan and his affair with Liz. Soon, Penny leaves Oakdale for England, where she marries racecar driver Anton Cunningham.
Tom Hughes, upon his release from prison, gets a job at Dr. Paul Stewart's clinic. It is there that he meets a patient named Meredith Halliday, who is suffering from an indeterminate illness. Meredith tells tom that she has just been evicted from her apartment and needs a place to stay. Thus Meredith moves in with Tom. Meredith, however, is not as down and out as she lets on, and a tip off comes when Meredith gives Nancy some costume jewelry that turns out to be worth $2000.
The truth is that Meredith Halliday is a runaway heiress trying to escape the supervision of her legal guardian, business tycoon Simon Gilbey. Simon, himself, arrives in Oakdale and has Chris Hughes handle his affairs. Simon is very demanding and pushes Chris so hard that he suffers an apparent heart attack. Chris is rushed to the hospital for treatment, and Donald returns from California. Donald disagrees with both Bob and Chris on Chris's treatment; Don wants Chris to undergo an experimental heart procedure, but Chris and Bob are against it. As it turns out, Chris' "heart attack" was caused by an abdominal obstruction.
Simon suffers a real heart attack of his own because of his workaholic ways. Bob and David warn Simon to start taking it easy or else he may die an early death.
Recently widowed Lisa briefly has an affair with Simon, but she is reluctant to marry him because of animosity between him and her son, Tom. The irony is that Meredith would leave Oakdale with Simon--as lovers!
Claire is involved in a couple reconciliations during what would become the last year of her life. First, she visits an ill Edith in Seattle. Claire and Ellen find it in their hearts to forgive Edith for her long ago affair with the late Jim Lowell.
After Edith recovers, Claire returns to Oakdale where she is forced to deal with her lingering hostility toward Dan. One day, Claire is hit by a car. During her dying moments in the hospital, Claire admits to Dan that she felt guilty for all the lost time between him and Ellen. Dan and Claire finally reconcile at this moment.