My 2008 Dodge Grand Caravan SXT (3.8 V6, 112K miles) was diagnosed with a catalytic converter failure. The van is drive-able. In the past check engine lights have been mis-diagnosed. Both the dealer and Pep Boys agree the converter assembly needs replacing. The question is this: Can a failed Oxygen Sensor give a false reading as to the converter needing to be replaced?
No!
The O2 sensor is just the messenger. It measures the amount O2 in after the cat.
And sometimes the O2 sensor is condemned because the cat has lost it’s efficiency.
Unless you get a code that indicates a problem with the O2 sensor after the cat, the sensor is reporting what it see’s.
Tester
What is the actual code?
Not sure. Only know what the dealer and PB have told me, that the catalytic converter needed to be replaced. The check engine light has been on for some time now.
almost certainly P0420 or P0430
maybe both 
There are alas mechanics who will tell you the dreaded P0420 ALWAYS means the very expensive cat needs to be replaced, and they may do this with inadequate troubleshooting. Or, of course, in some cases they know what they are doing which is replace the most expensive part first.
P0420 does not always mean the cat is bad. Bad sensors will also produce the codes.
Those mechanics who routinely tell customers the P0420 ALWAYS means you need an expensive cat in many or most cases will say, “Wal, while we’re at it, lets replace the sensors, too.” A great deal for them, not so great for you.
Get a second opinion from someone who has a good sensor tester and knows how to use it.
If you can’t find a good mechanic, have someone replace the correct sensors and drive it a while. If it still fails, then let them replace the cat. But, the good mechanic is the optimum choice.
Those guys need to come work with me
There are a lot of huge trucks in our fleet that are not OBD2 compliant, because of their size, not the age. And they don’t have rear sensors
We don’t always have a P0420 or P0430 code
There are other ways to determine if the catalyst is doing its job or not
A bad cat isn’t always plugged, sometimes you can hook up a backpressure gauge and everything looks fine, but the cat just isn’t doing its job
A bad cat doesn’t always generate P0420, even if it’s OBD2 compliant
5-gas analyzer will tell you a lot
“Get a second opinion from someone who has a good sensor tester and knows how to use it.”
Perfect answer in my opinion.
Can a failed Oxygen Sensor give a false reading as to the converter needing to be replaced?
The O2 sensor wouldn’t normally give a false reading. But the reading it gives and the error code it generates could be ambiguous or misinterpreted. The way that all works in most cars, there’s two O2 sensors monitoring the cat, one before and one after. If the cat is working those readings should be different, right? Otherwise, if the readings from the two sensors were the same, it would mean the cat isn’t doing anything. And to reduce emissions it has to be doing something.
If the dealer concurs with the chain shop the cat needs to be replaced, I expect that’s what’s needed. You’d likely be wasting your $$ going to an inde shop at this point for a third opinion. In the future though you’d likely serve yourselfbetter by seeking out a good well recommended inde shop to service your 2008 Caravan. So this might be a good time to establish a relationship with one. Ask around to find a good inde shop and have them replace the cat for you. If they do a good job, use them for your future repair needs. Neither a chain shop nor a dealership are particularly good places to service a 2008 Caravan imo.
Everyone around me swore about an inde shop just down the street. I was so excited, but they mistook a bad coil for a failed fuel injector. That’s an epic fail IMO… The chain got the business. The van runs better. They also provided financing, which the dealer would not.
A failed coil? That would cause a misfire, the driver of the vehicle should notice a misfire. Did you ask the driver of the vehicle if there was a drivability problem?