There is a special case where hibernate jpamodelgen doesn't work for nested entities:

Given foo.jar with these nested classes:

@Entity
public class A {
 @Entity
  public static class B {
  }
}

e.g. B is an audit table for A.

And a bar.jar with a persistence.xml with an entity mapping file containing:

<entity class="A$B" />

Running jpamodelgen on bar.jar results in the following invalid output:

@Generated(value = "org.hibernate.jpamodelgen.JPAMetaModelEntityProcessor")
@StaticMetamodel(A$B.class)
public abstract class A$B_ {
}

Running jpamodelgen on foo.jar doesn't try to generate an A$B_ class.

Kind regards,
Michael