INV_CAT_SET_NO_DEFAULT_CAT error when updating items using ego_item_pub

I am trying to update a newly created item using ego_item_pub.process_items. I receive "INV_CAT_SET_NO_DEFAULT_CAT" error. The default categories do exist. I can use the same API and create new items through a different program but when I am trying to update an existing item, this error occurs. Any ideas/suggestions to fix this issue?

We are on R 12.1.3

TRANSACTION ID : 1859642

ORGANIZATION ID : 101

TABLE NAME : MTL_SYSTEM_ITEMS_INTERFACE

COLUMN NAME :

MESSAGE NAME : INV_CAT_SET_NO_DEFAULT_CAT

ERROR MESSAGE : Definition of category set Product, assigned to functional area Product Reporting, does not have a default category specified.