One comment on refunds: hopefully you used a credit card with Paypal. If you did, don't even bother with Paypal, just call your credit card company and dispute the charge and ask that it be reversed. It's called a chargeback. I've had to do it before, and generally if you have good reason, the credit card will refund the money to you (and charge the merchant, hence the name "chargeback").
The problem with Paypal is that they are on the side of the merchant, not you. They make money from merchants, not customers buying stuff, so I'd think it unlikely you will prevail with them.
But with a credit card company your chances are better I think. Clearly the service he advertised is not what's being provided, "sick" or not. No refund is being offered to compensate for all the time they are "sick", time that you have already paid for in full, and are rightfully expecting the service to be provided. What are you supposed to do this whole time they are conveniently "sick"? Just have your money be wasted while nothing happens and no signals are provided? I think not. If you can make a good case for that, then any refund policy he has doesn't really matter.
Just sharing what's worked for me in the past...I wish you the best with that however you choose to proceed.
