Paulie was so nuts that the psychic was probably the only guy that would be safe from him.

He would work himself up in his own head and combined with his general paranoia,he would figure that either the guy would haunt him from the afterlife,or that the dead psychic would tell someone else during a seance that Paulie whacked him.

Paulie was afraid of pretty much anything that he couldn't explain. I can see him crossing the street and running into a church to make a novena if he ever saw the psychic again.