Transmission issue

I was driving my car, I reached a slowdown on the highway. As slowdown cleared, I accelerated. The car revved as if it was on neutral. I put car in park, turned car off. Turned it back on and put it in drive. Same revving, not moving. Wouldn't move in reverse either. No check engine light, no message from car.

I got the car towed to the shop, shop tells me it's a bad sensor (I forget the name of the sensor). They are going replace the sensor, change the transmission fluid. $500.00.

I get a call from them today, saying they changed the part and fluid, and now the check engine light is on and it's telling them I need a new transmission.

Is this normal? Can the possibly have damaged the transmission while changing fluid or the sensor? Am I dealing with a bad mechanic?