Back over in Sick Bastard Hospital, the nurse comes in to check on Fauxlivia, who feigns unconsciousness until the nurse leaves, and then she manages to reach over to the surgical cart and snag a scalpel. Flipping it around in her left hand, she starts to work it into the buckle that's got her arm strapped to the bed. She's making good progress until she screams in pain and drops the scalpel to the floor. In rushes the nurse, who takes a look at Fauxlivia and then pages the doctor on the intercom, saying they're ready. "What are you doing to me?" wails Fauxlivia, and we can see, in her belly, the limbs of her baby pushing against her skin.
After the commercial break, over on Liberty Island, Lee has apparently just filled in Walternate on what they learned from Henry Higgins. "And all this from a cab driver," says Walternate quietly. Lee says yes, and then adds that if there's any truth to what Higgins is saying, it could be a lead: "I need to know. Was our Agent Dunham replaced with theirs?" Walternate, who'd been facing away from him, looking out the window, turns and slowly walks towards Lee, taking a full 15 seconds to answer: "She was. Yes. And during that time, our Agent Dunham infiltrated their Fringe Division." Lee swallows, looking a little surprised by both the answer and Walternate's frankness. But still, he manages to summon up enough courage to say he wishes he had been told sooner.
Walternate says Lee wasn't told because it was classified, and he tells Lee that each Olivia was returned to her proper universe weeks ago (although he fudges it when he says that our Olivia was sent home instead of escaping). Sitting down heavily in his chair, he says he's starting to think that not sharing this information may hinder Lee's ability to find Fauxlivia and then quietly spills the beans about Fauxlivia carrying his grandchild. Lee wisely says nothing. Not even a "Congratulations, sir!" Walternate explains that getting knocked up wasn't part of the mission, but while she was on the other side, Fauxlivia and his son got close. Yeah, that's one way of putting it. "I believed the child and Olivia would be safer if no one knew the truth." Lee, looking completely stunned, asks who else knows about it. "As far as I know, just Fauxlivia and I," says Walternate, and then Lee asks what is an entirely logical question, knowing what he knows, for him to ask: Does Walternate think Fauxlivia might have been taken by invaders from the other side?