Katy had indeed returned to her work as a special agent for the FBI. Then while Katy was in the hospital with tonsillitis. Amber and Gretchen went on a routine assignment.
Gretchen was shot and killed by a two-bit criminal. Amber put three in his head before he hit the ground.
Katy simply blamed herself and once again did what she always did when the stress got too much. She regressed to toddler Katy.
She was once again put on leave of absence by the bureau and returned to her Hawaii home. Lena was very involved with her new career. She helped ex strippers get back on their feet and new careers.
She took over Katy’s finances and simply hired a new Nanny for her.