If the oxygen sensor has failed then it is not possible for the system to diagnose a failed catalyst. The dealer will be relying on fault codes, and a catalyst failure is normally a P0420 or P0430 fault code. The oxygen sensor codes I can’t remember, but make sure the dealer isn’t replacing bits that don’t need replacing at your expense.
If he says the sensor has failed, ask which one (upstream or downstream). The upstream controls the short term fuelling, the downstream the long term adaptations (and monitors the catalyst).
It is possible though that a common cause has affected both sensors and catalyst (really really crap fuel, misfire, oil being burnt, leaded fuel etc)