How is it paranoia if he was really being watched?

Doctors interviewed by the FBI told agents that when the associate justice stopped taking the drug, he suffered paranoid delusions. One doctor said Rehnquist thought he heard voices outside his hospital room plotting against him and had "bizarre ideas and outrageous thoughts," including imagining "a CIA plot against him" and "seeming to see the design patterns on the hospital curtains change configuration."

Yes, Willie Ren got the agency that was after him wrong (it was the FBI, not the CIA), but that these files exist is evidence he was being watched.

[H/T 2 memeorandum.]