Being a practicing workers' compensation attorney in the agricultural rich Fresno and Central San Joaquin Valley area, we frequently see these types of fraud play out.  In this case seen in the WorkCompCentral article, it was the employer who was underreporting payroll to lower their work comp premium, over a period of years. A father and daughter team were able to underreport their payroll by $11 million over a period of four years to skirt workers' compensation premiums.  

I know of one instance where a farm labor contractor was issuing checks, and advising their employees to go and cash them at a certain local grocery store, wherein the grocery store owner [who was in on the scheme] would then shred said checks, providing no evidence that the employee was ever employed by the farm labor contractor. This allowed the farm labor contractor to avoid having to pay higher premiums.  

In other cases, we see bogus policies being sold to these farm labor contractors by corrupt "brokers."  When an injury eventually does happen, the bogus policy does not provide any coverage for the injured worker.  There is always mass confusion at the WCAB between applicants and defendants when this happens, as to who should step up and assume liability.  Sometimes the Uninsured Employer Benefit Trust Fund [UEBTF] has to get involved, and reimbursement may be sought directly from the uninsured employer for the costs associated with UEBTF administering the claim. 

The Department of Insurance should be cracking down on this widespread fraud, in order to ultimately assist the legitimately injured worker in their work comp proceedings, whose quest for benefits may be severely complicated by these various nefarious schemes.  The cost for defendants to undertake discovery and litigation in these cases is also heightened due to the fraud complicating the matters.  Hopefully a crack down such as the one we see in the article will curb these types of fraud in the future.