Translation:Have you heard about the man who only eats ants?
For me at least, hearing "that" used instead of "who" sounds very unnatural when referring to a person. You're definitely right, I hear it often enough, it just sounds incorrect to me. It may just be me, though. For what it's worth, my intuition isn't always correct. I've found I've learned a lot about proper irregular past in English from the course. I use a lot of the wrong forms and I wouldn't have realized hadn't Duolingo corrected me!
I have heard about him actually: http://www.newsweek.com/man-eats-ants-survive-days-without-water-outback-382918