If you have a proper pre-slope, liner and final slope, seems it would be possible to Kerdi the walls to the pan as any water should migrate to the floor and be directed to the weep holes via the rubber liner.
Having said that, it should also be possible to chip out the drain, install a Schluter drain and simply Kerdi the walls AND the floor. That's the direction I would probably take. Dealer's choice here...
$400 is not out of line for the time and materials involved. I would have charged the same or more.
Avanti Tile & Stone
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