VSCode extension doesn't read env variables from ~/.claude/settings.json

Description

After updating to version 2.1.25, the VSCode extension no longer reads environment variables from ~/.claude/settings.json.

When launching VSCode from Dock, the extension shows the login screen instead of entering chat mode, even though ANTHROPIC_API_KEY and ANTHROPIC_BASE_URL are configured in settings.json.

Steps to Reproduce

1. Configure ~/.claude/settings.json with:

``json
{
"env": {
"ANTHROPIC_API_KEY": "your-api-key",
"ANTHROPIC_BASE_URL": "http://127.0.0.1:8045"
}
}
``

1. Launch VSCode from Dock (not from terminal)
2. Open Claude Code extension → shows login screen instead of chat

Expected Behavior

The extension should read env variables from ~/.claude/settings.json and enter chat mode directly.

Workaround

Setting system-level environment variables via launchctl setenv works, but this shouldn't be necessary.

Environment

• macOS
• Claude Code for VS Code: 2.1.25
• Using local proxy