Actually, the reports were that the Spurs orchestrated the heart-condition ordeal. Batum's father had died on a basketball court which was the result of a heart attack, said a Sports Illustrated article. This raised red flags throughout the NBA, which forced Batum to have some tests done on his heart in Toronto during the pre-draft workouts. However, the results were not conclusive. The results seemed to indicate that there might actually be some borderline problems if indeed Nicolas did have a family history of heart problems. However, Nic's father had actually died of an aneurysm, not a heart attack, according to his agent. All the while, Batum's draft stock was slowly slipping.
Since Batum wanted to prove that his heart was fine, Batum had to re-do the tests on his heart in Cleveland where he worked out for the Cavs. The Spurs, who was the next team to work out Batum got hold of the test results on Batum's heart and all signs were that Nic's heart was completely healthy. The Spurs obviously coveted Batum, especially since he would be the perfect fit as the perimeter defensive stopper to eventually replace an aging Bruce Bowen, and to add a French buddy for their franchise point guard, Tony Parker. So the Spurs held onto the medical results and said it got lost, thus scaring off many more teams, and I think this is where Batum's stock took a big hit because if there were no tests to confirm that Batum would be a healthy player, many GMs and organizations will not risk even a mid 1st round pick.
Somehow, KP found out that Batum was completely healthy and so he struck a deal with Houston for the 25th pick so that the Rockets could draft Batum, one pick before the Spurs' 26th pick, and trade Nic to us for our late 1st round pick Darrell Arthur and early 2nd round pick Joey Dorsey. It was another magnificent Pritchard draft day move, swindling and maneuvering his way to get the guy they targeted and swiping him away from teams that were waiting for him to drop to them.
Or at least that's how I remember it.