Model-based predictions of flow in porous media are critically dependent on assumptions and hypotheses that are not always based on first principles and that cannot necessarily be justified on the basis of known prevalent physics. Constitutive models, for instance, fall under this category. While these predictive tools are usually calibrated using observational data, the scatter in the resulting parameters has typically been ignored. In this paper, this scatter is used to construct stochastic process models of the parameters which are then used as the cornerstone in a novel model validation methodology useful for ascertaining the confidence in model-based predictions. The uncertainties are first quantified by representing the unknown model parameters via their polynomial chaos decompositions. These are descriptions of stochastic processes in terms of their coordinates with respect to an orthogonal basis. This is followed by a filtering step to update these representations with measurements as they become available. In order to account for the non-Gaussian nature of model parameters and model errors, an adaptation of the ensemble Kalman filter is developed. Instead of propagating an ensemble of model states forward in time as is suggested within the framework of the ensemble Kalman filter, the proposed approach allows the propagation of a stochastic representation of unknown variables using their respective polynomial chaos decompositions. The model is propagated forward in time by solving the system of partial differential equations using a stochastic projection method. Whenever measurements are available, the proposed data assimilation technique is used to update the stochastic parameters of the numerical model. The proposed method is applied to a black oil reservoir simulation model where measurements are used to stochastically characterize the flow medium and to verify the model validity with specified confidence bounds. The updated model can then be employed to forecast future flow behavior.