I'm guessing but the next I would check is that the permission to "Telephone" is set both in watch "Telephone" and all your phones related apps (Galaxy Wearable, Watch plugin).
(Perhaps it needs toggling or cache clearing if something is messed up.)
I think I may have figured out the problem. I also have a bt handset that I use as we've dc'd our landline. The watch likely can't bt to the phone that is already bt-ed to the handset? Does that sound right? If that's the case, how can I get the watch bt to take priority if I am attempting to use the phone app on the watch?
My phone have the same limitation and, if enabled, my car handsfree and the watch will fight over the one possible connection to the phone of handsfree type. I understand that some phone models can do it but if your phone can't I don't know a way of automatic priority and what you would need is a phone that can handle 2 connections. (I disabled telephone audio to my watch as I value the car handsfree much more.)
That's definitely the problem. If I disconnect the bt to the handset, I can make and receive calls from the watch. Now I'm trying to figure out a way to have the watch take precedence ONLY if I activate the phone app on the watch... My handset and watch are both actively connected to the phone but only one can actually make or receive I guess. I was trying to figure a way via bixby or macrodroid to have the handset bt disconnect when I launch the phone app on the watch. Can't figure how to do that cross device. If I knew what app on the phone allowed the watch to place a call through the phone, I could use a "when this app launches" scenario. Other than the actual phone app (on the phone), I don't know what "helper app" is involved. Does that make sense? It does in my head.... Lol.
I just went through this. I have my phone bt'd to a bt handset that we use instead of a landline. I was getting the exact same thing- "check your phone". As soon as I dc'd the bt connection for the handset, I was able to make/receive calls from the watch. In short, something is hooked to your phone by bt that is taking priority over your watch. Both my handset and watch were paired and I was able to receive texts/etc. via bt to the phone but no calls without disconnecting handset bt. And I do not have LTE.