Apple Watch Series 2 - Rash/Burn - Apple refuses to help

I purchased my Apple Watch Series 2 - 42mm Nike+ Space Gray Series - in the summer of 2017 and have immensely enjoyed the product. I have used it on a daily basis with little to no issues other than CPU performance following software updates. I live in Orlando and have regularly worn the watch through all sorts of conditions including swimming in the ocean and having 12+ hour days at the theme parks in the heat and have experience no problems... that is until recently.

About 1 month ago I was outside skateboarding (my form of exercise) and using the fitness tracker app. I look down at my watch and underneath I see a fairly prominent red circle underneath. I remove my watch and see a circular RED mark on my skin. I removed the watch at once out of concern but did not feel any searing pain (which makes me think it could have been a rash, more so, than a burn.) This rash appeared out of NO WHERE after wearing the watch for over 15 months.

I proceeded to open a case with Apple which led me to speaking with 4 separate Senior Advisors and 2 trips to my local Apple Store, all who referred me to the other party. At the end of this 3 week ordeal a Senior Advisor finally told me Engineering assessed this is user error and Apple is at no fault and will not be assisting me with any type of service or replacement without a $299 charge.

At this point I tried to wear the watch again and the red mark came back stronger and more prominent. Did I suddenly develop a nickle allergy after 15+ months of usage? What do I do .

TL;DR
My Apple Watch gave me a sever rash out of the blue after 15+ months of wearing the product. Apple said it was user error and refuses to assist me with service or replacement. What do I do?