Can we sue if my wife was wrongly accused of stealing meds from her work at a convalescent home as an LVN nurse?

On what basis was the lower court ruling reversed? If it was on a technical basis, that might not be very helpful to you. If the Appeals court found a reasonable person based upon the evidence could not have concluded she was guilty, that is helpful. But you must remember that the DA had to show to 12 people that beyond a reasonable doubt she was guilty, but the defendant in a civil case just needs to get 4 out of 12 jurors to think the balance of evidence is against her to prevent her from winning. Also, the employer may have acted reasonably, but just was wrong then there is no liability. Without having more information, we can not tell you what your chances are.