It's hard to say and to judge from this, how hard he's taken these so called close calls. Are we talking about midair collisions? I can definiately understand his fears. I flew in San Diego for a while and there were so many planes around it was hard to believe. Later that year a friend of mine was involved in a midair and died.
I have another friend though (pilot) that was out skydiving with a C206. The fuel was cut at around 200 feet and there was only woods to land in. Out of 7, 3 survived, most with heavy burns.
She was hospitalized for a significant period, but later, when fit, got into flying again and finished her ATPL+ME+IR+MCC.
Understandably, in this case, the medical was revoked but she got it back as soon as she was fit. I believe she had councelling during her hospitalperiod. Although her physical status was enough to get here medical pulled in, she would probably not have been able to fly after an accident like that. And here is the similarity to your friend. Nobody can "rank" the level of trauma he's recieved. You don't necesarily have to get hurt to understand the severity of the situation and maybe it's this that has got to your friend.
Now to the point: Even though he might get his medical revoked, what's to say that he can't get it back when he's feeling better and has healed his confidence? Will this interruption get him thrown off the course and loose his cash? Sounds unbelievable to me. But then again, depending on how hard he's taken this, they may or may not revoke his medical. Incase, they don't which is the most likely, there's no problem.
I whish him all the best
/LnS