Apple watch dead after overheating during charge

My two-year old watch overheated when charging overnight. After allowing it to cool down, the watch would not turn on and could not be reset.

I took the watch to the Apple Store and was told that since they could not diagnose the problem (the watch was dead) and that because I didn't have Apple Care, I would need to buy a new watch.

I can see being completely liable for a cracked screen or other abuse of the watch, but not for what appears to be a charging malfunction. Note that the watch was dangerously hot -- almost too hot to touch. This is especially worrisome given the presence of a Lithium Ion battery.

Any suggestions would be appreciated.

Steve_RG