Apple says I made modifications to my watch

My Series 3 SS watch would no longer pair with my phone after a failed update. At the Genius Bar they recommended sending it in for repair. I was quickly emailed: "Our technicians inspected your product. They say that it would cost more to repair the product than to replace it with a new product. That's because of either the product's condition or unauthorized modifications that were made"

They want $599 plus tax to repair it. And, they won't tell me what the modification was that I supposedly made. I made no modification. There was no damage to the outside and the watch still runs, just won't pair.

Do I need to just throw away this watch? It's my second Apple Watch and I decided to splurge and get the sapphire crystal since my first one met its demise with a broken screen.

Thanks.