LOS ANGELES—Blue Cross of California complied with state law when it offered only $2,000 in annual coverage for fertility treatments and was not obligated to cover the entire cost, a California appellate court ruled.

At issue in Wednesday’s ruling by the state appellate court in Los Angeles was a renewal package offered by Thousand Oaks, Calif.-based Blue Cross of California to Santa Barbara, Calif.-based Westmont College. The offer included paying a maximum of $2,000 a year for half of the cost of treating a group member for infertility, which complied with a state mandate that obligates insurers to offer infertility coverage, according to the ruling in Deborah Dunn Yeager vs. Blue Cross of California.

Westmont refused to buy the coverage, in part because of its high cost. Ms. Yeager, a Westmont employee, was unable to become pregnant without medical assistance and could afford only limited infertility treatment, which proved ineffective, according to the decision.

She sued Blue Cross in 2006, alleging unfair competition and false advertising. Ms. Yeager sought recovery for her out-of-pocket expenses for the infertility treatment above Blue Cross’s $2,000 annual limit and “for her pain and suffering from losing her chance to bear a child.”

Ms. Yeager contended that Westmont College’s health plan with Blue Cross violated state law, but the appellate court disagreed.

The law “obligates Blue Cross to offer coverage for infertility treatment, and leaves to Blue Cross’ and Westmont College’s mutual agreement the amount and cost of that coverage,” the court ruled. “Blue Cross complied with the statute by offering such coverage, which the college declined.”

Ms. Yeager also contended that Blue Cross’ $2,000 annual maximum on infertility treatments was insufficient and “akin to an insurer pretending to provide ‘full coverage’ against earthquake damage to a building by offering a benefit of only $1,” said the opinion.

Ms. Yeager’s analogy may be correct, but nowhere does the law “state the coverage that the parties negotiate must be full,” said the three-judge panel, which ruled unanimously in upholding a lower court’s summary judgment dismissing the case.

“The legislature knows how to establish health plans’ coverage and costs when it chooses,” the appellate court said. It “did not intend to require a particular amount of coverage at any particular price.”