Is it true that as of 2014, flight reviews are waived for current flight instructors under FAA rules?
It is false.

14 CFR §61.56(f) states:


  A person who holds a flight instructor certificate and who has, within
  the period specified in paragraph (c) of this section, satisfactorily
  completed a renewal of a flight instructor certificate under the
  provisions in §61.197 need not accomplish the one hour of ground
  training specified in paragraph (a) of this section.


Also, AOPA has some great input on this topic:

"Pilot's Guide to the Flight Review"

Bottomline: You are correct, your friend is not. 

Maybe there was a misunderstanding in the conversation whereby they were specifically talking about their own certificate (and any ratings they may be seeking that may take place of the flight review) as opposed to a general term?