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Sigmund Freud speaks of the "psychical" reality as the realization of things that operate entirely in our minds due to the things that we are raised and taught to believe in. This is also known as "internal reality". This is reality from a psychological and cognitive perspective.
External reality would coincide with the things that surround individuals and which are physically and concretely "real", or present at a specific moment. To deny that something concrete is real may have a lot to do with some form of flawed mental/visual process.
Now, if we adhere to semantics, the answer to your question would be "No" because something "incorrect" refers to something flawed in itself. Reality is not flawed itself, but the perception of what a person's individual reality is may certainly be.
However there is a bit more to it.
Consider first, what exactly is the difference between what the individual perceives versus what the people around the individual see. In the case of a person suffering from schizophrenia or borderline personality disorder, it is common to see instances of paranoia where the individual thinks that he or she is being looked at, or talked about, or chased after. It is also common to create scenarios that are completely dissonant with what is really happening in that person's life.
In that specific case, the person is certainly suffering from a disorder that may be treated with medication.
However, at a much lower end, the perception of reality may have more to do with upbringing than with nature and psychology.
People who are raised with a certain type of mentality are not ill; they simply adhere themselves to specific values which they hold true. For instance, people who follow radical movements, or who live lifestyles that are considered "alternative" (extreme tattooers, communards, etc) feel that their reality is quite OK. After all, this is what they grew up with, what their support systems accept, and what has been there with them from the very beginning. They are NOT ill. They are not in need of medication, nor of therapy. They simply see and perceive things the way in which they were meant to see and perceive things.
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