I'm not sure why people down-voted this. I'm also not understanding the "Why" comments. With respect to everyone's opinion on code formatting, we have our internal policies for how we format code. This question wasn't meant to solicit political responses from developers with differing opinions to how we format our code.

Now, back to the problem at hand...

The issue was with the ms-dotnettools.csharp extension. In our case, version 2.76.27. After a bit more searching around the web, we came across the Github Issue below, which gave us an acceptable fix.

https://github.com/dotnet/vscode-csharp/issues/8316

An unintentional side affect, however, is that auto-indentation stopped working for curly-braced code blocks. So, we need to arrow-up and tab. But, our developers can live with that over the alternative, which was VS Code auto-formatting everything within the current block.