[BUG] Authentication issue with Visual Studio Code Plugin

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

When I send the first request of the day in the Visual Studio Code extension, it requires me to re-authenticate. I then get the error message pasted below, and cancels my request.

However, when I then re-send the request it does not ask me to authenticate and works, implying that the authentication did succeed.

What Should Happen?

Authentication success passes to Plugin and I am not required to re-send my first prompt of every day. Authentication success lasts longer and does not require me to re-authenticate every day.

Error Messages/Logs

Failed to authenticate. API Error: 401 {"type":"error","error":{"type":"authentication_error","message":"OAuth token has expired. Please obtain a new token or refresh your existing token."},"request_id":"req_011CZ12qECW3S15VJEqErHfZ"}

Steps to Reproduce

1. Send first request of the day into the plugin
2. Screen requests authentication
3. Re-authenticate successfully and "Authorize" usage in the Web UI
4. Go back to Plugin to see error

Claude Model

None

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

2.1.74 (Visual Studio Code Extension Version)

Platform

Other

Operating System

Windows

Terminal/Shell

VS Code integrated terminal

Additional Information

_No response_