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Everyone in Haven seems to partake in some sort of peculiar activity, which is nothing unusual. So what separates the "normal crazies" from the "abnormal crazies"?
Audrey and Nathan get a call that the patients in the mental hospital are really going insane— Throwing medicine (and nurses), fighting and destroying things. When they get there they expect to find a coherent doctor who can assist them in detaining the patients, but instead they find a doctor who is engaging in the same destructive behavior. After detaining Dr. Loucacia, who eventually snaps out of his "crazy spell", they discover that three patients escaped.
Two of the patients are stage three Catatonics which means they can't speak and lack motor skills but miraculously they are now talking and engaging in normal human activity. However, the third escaped patient is Lilly who has PTSD (a grand-mal obsessive disorder) that causes her to obsess over music. Lilly was a composer on her way to stardom before she and her husband were involved in a near fatal car crash that almost left her brain dead. Since the crash, she has sporadic spells in which she forgets the music she composed or how to play the piano. This forces her to become obsessive and very angry. Like the other patients Lilly suddenly becomes better, but she wont stay that way for long.
After locating and detaining two of the escapees (of course Lilly is still missing), Dr. Loucacia concludes that accidentally dropping a tray of medicine in the common area which contained his experimental anti-Alzheimer's medicine is what caused the rapid change in him and the patients. However, Audrey discovers that it wasn't Dr. Loucacia's medication but an invisible force of some sort that entered that room moments before he dropped the tray. Whatever it is, it is most certainly contagious and they must find the source immediately.
In a twisted turn of events, Nathan is infected and it isn't until he lights a match to his own arm, amasses an incredible amount of strength, trashes Duke's boat, fights Duke (because Duke accused him of hiding a secret about his past from Audrey), is tasered and tied up that he turns back into his old self.
Shortly after Nathan gets better, Lilly becomes worse. They realize that Lilly's husband Ray is the culprit. Not long after their car crash, Ray discovered that he could fix Lilly and the other mentally unstable patients by playing music for them. However, doing this made all of the sane people sick.
In the end, Ray is allowed to take Lilly and the other two patients out on the sea to live where he could play his music for them and not negatively affect the people on land. Clearly, this is a "special blend of Haven crazy" according to Audrey, who finds out from one of the patients that the name of "The Colorado Kid" she's looking for is Lucy. (Cliffhanger huh?)