**Core Concept**
Jaundice in newborns is a common condition characterized by elevated levels of bilirubin in the blood, leading to yellow discoloration of the skin and eyes. The pathophysiology involves the breakdown of red blood cells, liver immaturity, and the inability to conjugate bilirubin.

**Why the Correct Answer is Right**
Bilirubin is a byproduct of heme catabolism, and in newborns, it is primarily processed in the liver. However, the newborn liver is immature and lacks the necessary enzymes to conjugate bilirubin, leading to its accumulation in the blood. This condition is known as physiological jaundice, which typically peaks between 3-7 days of life. Physiological jaundice is a self-limiting condition that resolves as the liver matures and bilirubin conjugation increases.

**Why Each Wrong Option is Incorrect**
**Option A:** This statement is true, as physiological jaundice is a common condition in newborns, especially in the first week of life.
**Option B:** This statement is true, as hemolytic disease of the newborn (HDN) can cause severe jaundice due to increased breakdown of red blood cells.
**Option C:** This statement is incorrect, as congenital hypothyroidism is not typically associated with jaundice in newborns. While thyroid disorders can affect liver function, they are not a primary cause of jaundice.

**Clinical Pearl / High-Yield Fact**
A key clinical finding in newborn jaundice is the presence of a "scleral icterus," which refers to the yellowing of the whites of the eyes. This finding is often more pronounced than skin jaundice and can be a useful diagnostic clue.

**Correct Answer: C.**