The short answer is that yes, server side occlusion culling is possible, but it's often not done due to complexity and limited benefit.
Keep in mind that for a large portion of modern FPS games, complete occlusion is rare. Characters these days use cover or hide in grass, and the actual uniforms and camouflage actually has an impact on visibility. Walls and corridors still play a large part of online battle, but not as much as in years past.
Games with lots of tight corridors and opaque surfaces can (an sometimes have) used occlusion culling on the server for event filtering. This just doesn't work so well for large open environments and realistic cover/camo games.
Wall hacking is also only one small part of cheating in online games, and fixing each individual hack has not worked well so far. The best approaches have simply been high quality match making and player rating systems that filter out the cheaters and decrease the likelihood getting put into a frustrating match.