I see it so frequently in SOL stories it makes me wonder if they've changed the rules since I was in sixth grade English (before The Flood).
What I was taught was that if it refers to a person or an animal with a name, you use "who"; otherwise use "that".
Examples:
INCORRECT: Jimmy is a 16-year-old THAT has never spent a day in a hospital.
CORRECT: Old Nobbin is a horse WHO has earned his retirement. (In this case, they must have named him Old Nobbin when he was a colt.)
CORRECT: He is the cat THAT woke us up last night.
Have the rules changed?