[BUG] Extension does not respect settings

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?

I am setting defaultMode to plan in ~/.claude/settings.json but when I use vscode extension it does not show this mode by default

What Should Happen?

It should respect all configs from user folder

Error Messages/Logs

Steps to Reproduce

Configure defaultMode in ~/.claude/settings.json

Expect them to appear in extension

Claude Model

Not sure / Multiple models

Is this a regression?

I don't know

Last Working Version

_No response_

Claude Code Version

2.0.13

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

_No response_