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In 1976, several new characters were introduced to General Hospital. Among them was Terri Arnett, whose husband David, a doctor, had been killed in Vietnam. Terri was the daughter of Steve Hardy's closest friend, the late Dr. Lars Webber. Once an aspiring singer in New York, Terri returned home when Lars Webber and his wife Helen were killed in an accident to play surrogate mother to her two younger brothers, Rick and Jeff. Rick, a promising resident at General Hospital, volunteered for a six-month medical stint in Africa. Two months after his arrival, he was reportedly killed when the small plane in which he was being piloted to a remote village crashed and burned.

Rick's dashingly handsome younger brother, Jeff, graduated from med school in the spring of 1976 along with his wife, Monica, who had once been Rick's fiancee. Dr. Steve Hardy tapped the young married doctors for a bold new experimental program at General Hospital -- Mr. and Mrs. Intern! For Steve Hardy, the Mr. and Mrs. Intern experiment was a noble gamble. He believed that Jeff and Monica were a perfect choice. Six months into their marriage, he assumed they were ideally happy. He was wrong! Their new marriage was a wreck! Jeff had a hang up -- he feared that everyone at General Hospital was comparing him to his "late" brother Rick. Fearing he would always be "second best," Jeff's every thought was plagued by memories of his dead brother. Jeff missed Rick dearly -- and so did Monica. More than anyone -- even Jeff -- knew.
Rick Webber was very much alive and being held, against his will, having been captured ten months earlier by revolutionaries in an African civil war. As for Jeff, he was wary every time he saw Monica and Rick together. His jealousy exploded into anger when he stumbled upon the secret that his wife and brother had met in New York just before Rick returned to town. For the good of the staff, Steve Hardy abandoned the "Mr. And Intern" program. Soon, Rick and Monica found themselves locked in a passionate kiss! During the summer of '76, Diana Taylor hired the scheming Heather Grant to be the nanny for her daughter, Martha. The product of a lower-class background, Heather beat out the competition the way she knew best – by cheating. Desperately wanting the job, Heather devilishly gave Diana a forged letter of reference. Heather set her sights on Jeff Webber, whose marriage to Monica was faltering once and for all. Jeff's suspicions of Rick and Monica grew more fierce, and his thoughts were clouded by the abundance of pills he took to numb his pain. When Rick and Monica were away on a hospital trip, a drunken Jeff became convinced they were having an affair. He raced to their motel and burst in Monica's room -- only to find her all alone. After a bitter fight with Jeff, Monica found solace in Rick's arms. Together, they gave in to their long-held feelings and made love. Soon after, Jeff fell in to Heather's eager arms. She wangled her way back into his bed -- and became pregnant with his baby.
Late in the year, Jeff disappeared! Where could he be? Rick was worried, Monica frightened and Heather, most of all, needed Jeff because she was pregnant with his baby! Meantime, Jeff showed up at a bar downtown - Barney's Place - drunk, despondent, and high on amphetamines. Barney, fearful that he'd wander out and get Barney into trouble, put Jeff up in the back room overnight. Unknown to him, Jeff stole a gun from behind the bar. Dr. Mark Dante showed up the next day to bring Jeff home, but upon his arrival, the sound of a gunshot shattered the early morning calm. Mark raced into the back room, where he found Jeff unconscious -- with a bullet in his brain. Rick blamed himself. Terri, fearful that Jeff would die, went to Dr. Steve Hardy to say that her mother, Helene, on her deathbed, had told Terri of the existence of a letter. Hidden away in a safety deposit box, the letter revealed that Dr. Steve Hardy was Jeff's father.
After Jeff's near-tragic bullet to the brain, Rick realized he must break off with Monica. Still, Monica refused to accept that they would never be together. Jeff recovered and reconciled with Monica, but was shocked to discover that Heather was carrying his child. The news of Jeff and Monica's reconciliation crushed Heather, who faked a suicide attempt to try and win Jeff's affections. Heather's efforts were all for naught. Once she detected that Jeff still wouldn't leave Monica, she ordered him to leave her alone. Heather had plans for her baby -- plans that would net her a fortune! Heather revealed her scheme to her mother: she wouldn't abort her unborn child, as Jeff wanted, but she would have the baby and sell it to Diana and Peter, and take the money to make a new life for herself. The Taylors wanted another child. They tried to adopt -- but their plans to bring foster son, Mike into their family was thwarted when Diana's past involvement with the late Phil Brewer came to light. Diana desperately wanted a brother or sister for her daughter, Martha, and found herself tempted when Heather offered her baby in exchange for 10,000 dollars in cash. Monica, shaken by the news that Rick had asked Lesley to marry him, finally did what she had long feared to do. She asked Jeff for a divorce! On the rebound, Jeff asked Heather to marry him, but recanted his proposal when Heather's ex-husband Larry Joe told Jeff of her many deceptions.
After the birth of her baby, Steven Lars, Heather took $500 of Jeff's money and fled to New York City -- the Big Apple -- where she hoped to fulfill her grand dreams of a fabulous modeling career! Her landlady, Mrs. Hadley, arranged for the Taylors to adopt her baby - without knowing that Heather was the mother. After Mrs. Hadley and the lawyer took their cut, Heather was left with only $1800 of the $10,000 -- not even enough for her to establish herself in Hollywood. Heather couldn't bring herself to reveal the real story of Steven Lars. Instead, she told the inexcusable lie that the child had died. Touched by her story, Jeff proposed to Heather. Once back home, the newly engaged Heather began to spend considerable time with the Taylor's and "Peter, Jr Heather returned to Port Charles where she spent precious time with her son, Stephen Lars, or "P.J." as he was known by his new family, the Taylors. She began to devote more and more of her time to "P.J." As the nanny, she was able to see her son every day, but Heather's all-consuming interest in the child's welfare alarmed Peter and Diana. Fearing her interest was unhealthy, Peter and Diana dismissed Heather.
Still, she discovered ways to see her beloved son. Heather's wish came true when she married Jeff Webber, but early in their marriage the newlyweds saw little of each other because of Jeff's hospital duty and long hours of study for his license. Soon, Heather was pregnant-- but not 100% happy! Conversely, Jeff was overjoyed. "If it's a boy I want to name him Steven Lars!" he gushed to his stricken new wife.
In the winter of 1979, Dr. Steve Hardy was forced to place General Hospital under quarantine due to an outbreak of a rare and mysterious disease known as Lassa Fever. Steve, Rick, Alan, Audrey, Jeff and Monica were among the hospital staff, employees and even visitors who were quarantined within the walls of the hospital for weeks. After weeks of exhaustive work, Dr. Steve Hardy fell ill with the potentially-fatal disease. Flushed and weak, Steve continued to treat the sick patients before passing out. Believing that Steve was on his deathbed, Audrey stunned Jeff with the fact that Steve was his real father! Jeff was stunned and hurt by the news, and was cold to Steve upon his recovery.

Across town, Heather Webber desperately tried to win her son, Steven Lars, away from Diana Taylor by driving her insane! Increasingly, Diana grew more dependent on -- who else -- Heather! In one final diabolical move designed to destroy Diana, Heather purchased LSD and planned to give it to Diana. Heather placed the LSD into a glass of iced tea, but little P.J. mixed up the two glasses. By mistake, Heather drank the LSD and began to wildly hallucinate.
Jeff had no choice but to ship his wife to Pine Circle Sanitarium. In the aftermath, Jeff grew close to his roommate Joe Kelly, who had fallen in love with a virginal nurse, Anne Logan. Annie, who was Audrey's niece and a registered nurse, had recently adopted an orphaned child prodigy, Jeremy Hewitt.
In a shocking revelation, Dr. Peter Taylor learned from Heather's mother, Alice, that Steven Lars was actually PJ! When Peter suffered a heart attack and died, the news remained secret. Diana, going through Peter's old clothes, found the fateful note he wrote only moments before he died -- "PJ is Steven Lars." Out of her shock, she realized she could lose the child she loved so dearly. That is, unless she married Jeff Webber. Then they would both have what they want -- PJ and Steven Lars! Diana Taylor, now aware that PJ was Steven Lars, tried to woo Jeff, but the handsome young doctor was already seriously smitten with nurse Annie Logan.
The young lovers hoped to marry, but of course, Jeff was already married to Heather, who had been committed to an institution. However, Heather soon emerged from her delusional state, faked catatonia and escaped from Forest Hills Sanitarium! With fierce determination, she headed for the Hardy's where, looking through the window, she saw Anne in Jeff's arms! She returned to the sanitarium, but eventually was released.
By stealing a gun from the Webber house and faking hysteria, Heather convinced Lesley, Rick, and Dr. Nelson that she must return to Forest Hills. Only there could she safely carry out her plan to murder Diana Taylor! Once back at the sanitarium, Heather hid the gun in the body of her deeply disturbed friend Sarah's baby doll. Then when the moment was right, she slipped out of Forest Hills and headed straight for Port Charles with murder on her mind. Entering Diana's apartment with a set of stolen keys and drawn gun, Heather stood frozen at the sight of Diana and Jeff, who had been rejected by Anne, making love!
Diana, hoping for a future with Jeff, finally revealed the secret that PJ was actually his son, Steven Lars. Jeff, bewildered and angry that Diana had kept the truth from him for so long, stormed out of the apartment. At wits end, Diana pleaded with him, from the open door, to stay. Anne, unseen by them, arrived in time to overhear the bitter exchange. Seeing Jeff, then Anne, leave the building, Heather entered for the kill! Within moments, Diana's body lay lifelessly on the kitchen floor. In the final step of her elaborate frame-up, Heather wrote Anne's name, in blood, next to Diana's body.
Police Chief Burt Ramsey -mounted a clear-cut case against a frightened Anne Logan. Jeff took PJ and left town. With a tearful goodbye, Dr. Jeff Webber, his young son in his arms, departed Port Charles. Heather soon received a letter from Jeff asking for a divorce. But not because he wanted Anne! He had found someone else. Joe Kelly, now in love with Heather, refused to believe Ramsey's theory that there was a second gun involved in Diana's murder. The killer turned out to be Heather’s mother -- Alice Grant, who admitted killing Diana to prevent her from murdering Heather! Afraid for her daughter's life, Alice killed Diana while trying to wrestle the gun away from her.