Yep. You try to infect the adjacent cities. You advance the outbreaks counter. You scar anybody standing there.
The only difference is that when you come to increase the panic level it's already maxed out. So you don't increase the panic level and don't add a new sticker. And, having already fallen, it doesn't fall again. People standing there may get scarred, but at least they're not automatically Lost.
Optionially you also say something like "It's their world now, we're just living in it" then keep going to see which character dies before Season 2.