ATC are professionals and quite at liberty to report somebody that they feel is incompetent/a danger to others.
This is similar to what happened to Bob Hoover which, in my opinion was a disgusting abuse of power. This is the point that gasax was making. I know the FAA are not ATC but the point is the same.
ZA
For those who don't remember the FAA decided he was flying erratically and removed his licence. There was so much of an outcry that they reversed the decision a year or two later.
In the meantime the Australians had given him a licence!!