I just watched the movie and here's my theory: I think Teddy realised that Dr Cawley was actually telling the truth that he killed his wife who murdered their children. The reason I'm saying this is because he asked Chuck which could be worse live as a monster (live with the fact that he killed his wife who murdered their children) or die a good man (go through lobotomy and forget about the fact that he killed his wife) So when Chuck asked him what's next and he replies we gotta get off this rock and get back to the mainland he is intentionally giving Chuck the impression that he still believes that they are working on a case, so that they can send him for lobotomy. In short he is choosing to die as a good man.