Melt butter in a large skillet over medium heat. Add the mushrooms and green pepper and onion; cook, stirring occasionally, for 1 to 2 minutes or until tender but not brown. Stir in flour, salt and paprika. Gradually add evaporated milk. Cook over medium heat, stirring constantly, until mixture comes to boil.
Whisk 1 cup of thickened sauce into egg yolks; pour into saucepan. Cook over medium heat, stirring constantly, until mixture comes to a boil. Stir in chicken, pimento and sherry. Heat through.
Serve immediately over hot biscuits.